Personal Loan Prepayment Calculator

Example data table

These examples illustrate how different prepayments can change interest and tenure.

Formula used

This calculator uses a standard fixed-payment amortization model:

• Monthly rate: i = annual_rate / 12 / 100
• EMI: EMI = P × i × (1+i)^n / ((1+i)^n − 1) (or P/n when i = 0)
• Monthly interest: Interest_m = OpeningBalance_m × i
• Principal from EMI: Principal_m = EMI − Interest_m
• Extra prepayment: added directly to principal in that month.

If your lender calculates interest daily, uses different rounding, or applies special rules, your statement values may differ.

How to use this calculator

1. Enter your loan amount, annual rate, and tenure.
2. Add a lump sum month and amount, monthly extras, or both.
3. Select whether you want to reduce tenure or reduce EMI.
4. Include any penalty and processing fee details.
5. Click Calculate to see savings and the schedule.
6. Use the download buttons to save CSV or PDF.

FAQs

1) Does prepayment always reduce total interest?

Usually yes, because principal reduces sooner. However, penalties, fees, or restricted rules can reduce or eliminate savings. Always compare total cost.

2) What is the difference between reducing tenure and reducing EMI?

Reducing tenure keeps EMI similar and finishes sooner. Reducing EMI recalculates a lower payment after prepayment, improving monthly cashflow while often keeping a similar end date.

3) Why might my lender’s numbers differ from this calculator?

Differences can come from daily interest, exact disbursement dates, payment timing, rounding rules, compounding, or how a lender applies extra payments and penalties.

4) Should I prepay monthly or save for a lump sum?

Paying earlier usually saves more interest. Monthly extras reduce principal sooner, while lump sums can be easier to plan. Compare both options, including any penalty thresholds.

5) How does the prepayment penalty work here?

The penalty is calculated as a percentage of each extra payment only. Regular EMI amounts are not penalized in this model unless your lender states otherwise.

6) What does “Recast after each extra” mean?

Some lenders recalculate EMI only after a lump sum, while others can recast after any extra payment. This option lets you model either behavior when using the reduce-EMI strategy.

7) Can I model multiple lump sum prepayments?

This version includes one lump sum and a monthly extra range. For multiple lump sums, you can run scenarios and compare exports, or extend the code to accept a list of events.

8) Is it better to prepay or invest instead?

It depends on your investment return, risk, taxes, and liquidity needs. Compare the loan’s effective cost after savings and penalties with realistic after-tax returns.