Original amount borrowed.
Reducing-balance rate.
Tenure agreed at the start.
Extra amount paid once.
Years into the loan when you prepay.
Quick examples
Prepaying ₹5,00,000 after 3 years on a ₹50,00,000 loan at 8.5%.
What each result means
EMI (unchanged)
What it is: The EMI stays the same; the tenure shortens.
Your value: ₹43,391
This page uses the 'reduce tenure' option.
Interest saved
What it is: Interest without prepayment minus interest with it.
Your value: ₹13,19,639
The headline figure.
Tenure reduced by
What it is: How many EMIs you no longer pay.
Your value: 41 EMIs
Earlier prepayment saves more.
Interest without / with prepayment
What it is: Total interest in each case.
Your value: ₹54,13,879 / ₹40,94,240
Compare the two.
Year-by-year breakdown
| Year | Balance without prepayment (₹) | Balance with prepayment (₹) | Interest this year — with (₹) | Cumulative interest saved (₹) |
|---|---|---|---|---|
| 1 | ₹49,00,489 | ₹49,00,489 | ₹4,21,182 | ₹0 |
| 2 | ₹47,92,181 | ₹47,92,181 | ₹4,12,387 | ₹0 |
| 3 | ₹46,74,300 | ₹41,74,300 | ₹4,02,813 | ₹0 |
How to read this: both balances use the same EMI; after the prepayment the second balance falls faster and reaches zero sooner.
Showing the first 3 of 20 years. Want charts, formulas and the full schedule? Get the detailed PDF.
What this calculator does
This calculator applies a one-time prepayment to a reducing-balance loan, keeps the EMI the same, and shows how much interest and how many EMIs you could save.
What your result means
These figures are what the numbers show under a fixed rate. Check your lender's prepayment terms; RBI does not allow foreclosure or prepayment charges on floating-rate term loans to individuals for non-business purposes.
Formula
1. Monthly balance update
Symbols
- B
- Outstanding balance
- i
- Monthly rate
Why this formula works
Interest accrues on the balance each month; the EMI pays interest first. A prepayment cuts the balance directly, so all later interest falls.
2. EMI
Symbols
- n
- Months
Working for your numbers
- EMI = ₹43,391 on ₹50,00,000 at 8.5% for 240 months
- Interest without prepayment = EMI × 240 − P = ₹54,13,879
- With ₹5,00,000 prepaid after year 3: loan closes in 199 months, interest ₹40,94,240
- Interest saved = ₹13,19,639
Frequently asked questions
Reduce tenure or reduce EMI?
Reducing tenure usually saves more interest; reducing EMI eases monthly cash flow. This page shows the reduce-tenure case.
Are there prepayment charges?
For floating-rate loans to individuals (non-business), RBI bars them. Fixed-rate and business loans may carry charges — check your loan agreement.
When should I talk to a professional instead?
Before a real decision, especially a large or long-term one, speak to a SEBI-registered investment adviser or a qualified professional. This page is educational only.
Symbols and assumptions
- P
- Loan amount
- r
- Annual rate
- x
- Prepayment
- k
- Year of prepayment
- The rate stays fixed for the whole tenure.
- EMIs are paid at the end of every month.
- Processing fees, insurance and GST on fees are not included.
- The prepayment is made right after the EMI at the end of year k.
Sources and review
Reviewed 2026-09-29 · Next review 2027-09-29
- Reserve Bank of India — Master Directions & Fair Practices Code for Lenders
- RBI — Key Facts Statement for loans & advances (2024)
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How it works
Compares your original repayment schedule with a revised one after a lump sum part-payment.
The formula
Interest Saved = Original Total - Revised Total- Prepay
- One-time part-payment
Worked example
Prepaying ₹2 Lakh on a ₹30 Lakh loan can save several lakhs in interest.
Pro tips
- Prepay early in the loan tenure for maximum savings.
- Ensure no heavy prepayment penalties apply.
Common mistakes
- Using emergency funds for loan prepayment.
Go deeper
Concepts to explore
Related guides
Institutional grade calculations are illustrative and for educational wealth architecture. Results do not constitute investment advice.