About this calculator
Prepayment works because interest is charged on the outstanding balance. Every rupee you pay above the EMI reduces that balance immediately, which removes interest from every remaining month, not just one.
The table below compares your loan as it stands with the same loan plus ₹2,000 extra each month. Change the inputs above to see the effect on your own numbers.
How to use it
- Enter the amount you plan to borrow — not the asset price, unless you are financing the whole thing.
- Set the annual interest rate your lender has quoted, and the tenure in months.
- Read the monthly EMI, then check the amortisation table to see how much of it is interest in year one.
How the EMI is worked out
The calculator uses the standard reducing-balance formula used by every bank in India:
EMI = [P × r × (1 + r)n] ÷ [(1 + r)n − 1]
where P is the principal, r is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the tenure in months. In Excel the same answer comes from =PMT(rate/12, months, -amount).
What an extra ₹2,000 a month would do
Same loan, same rate, one extra payment every month. This is the cheapest way to cut the total cost of any loan.
| Scenario | Monthly payment | Loan closes in | Total interest |
|---|
Floating-rate home loans to individuals carry no prepayment penalty in India. Personal and car loans often charge 2–5% of the outstanding amount — check before you prepay.
Year-wise amortisation schedule
How the loan actually unwinds: the interest share falls every year while the principal share rises.
Show the year-by-year break-up
| Year | Principal paid | Interest paid | Balance left |
|---|
Frequently asked questions
Is prepayment always worth it?
When the loan rate is higher than the post-tax return you can earn on the same money, yes. A 9% home loan is a guaranteed 9% saving; a 13% personal loan is very hard to beat elsewhere.
Are there prepayment charges?
Floating-rate home loans to individuals have none in India. Personal and car loans often charge 2–5% of the outstanding amount.
Should I reduce the EMI or the tenure?
Reduce the tenure. Keeping the EMI the same and shortening the loan saves materially more interest than lowering the monthly payment.
Does prepayment affect my credit score?
Closing a loan early is positive. A single large prepayment is neutral for the score and reduces your total outstanding debt.
How much extra should I pay each month?
Start with 5–10% of the EMI. On a ₹26,000 home loan EMI, ₹2,000 extra can remove four to five years from a 20-year loan.
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Before you apply
Get the sanction letter and check three things: whether the rate is fixed or floating, what the processing fee is, and whether part-prepayment carries a charge. Those three lines decide the real cost of the loan, more than the headline rate does.
This page is updated when rate ranges change. Last verified 28 October 2026.