Loan Prepayment Calculator

How to Use This Calculator

1. Enter your loan amount and interest rate
2. Set your loan tenure in years
3. Choose your prepayment type:
   • Recurring Prepayment: Set a fixed amount to be paid at regular intervals:
     • Monthly - Every month
     • Quarterly - Every 3 months
     • Semi-Annual - Every 6 months
     • Annual - Every 12 months
   • Custom Prepayments: Add multiple prepayments at specific months of your choice
4. Enter the prepayment amount(s)
5. Click "Calculate Impact" to see how prepayments affect your loan

Features

• Two prepayment modes: recurring and custom
• Flexible frequency options for recurring prepayments
• Multiple custom prepayment entries
• Visual representation of payment schedule
• Detailed breakdown of principal and interest
• Track loan balance changes
• Calculate interest savings

Important Considerations

• Check your loan agreement for prepayment penalties or restrictions
• Consider the timing of prepayments for maximum benefit:
  • Regular monthly prepayments provide consistent reduction in interest
  • Quarterly or semi-annual prepayments might align with bonus payments
  • Annual prepayments could match yearly tax returns or bonuses
• Evaluate between EMI reduction and tenure reduction
• Maintain an emergency fund before committing to regular prepayments
• Consider tax implications and alternative investment opportunities

Frequently Asked Questions

• What is loan prepayment?

• Loan prepayment is the act of paying off part or all of your loan principal before the scheduled due date. This can help reduce your total interest outgo and/or shorten your loan tenure.

• How does prepayment affect my monthly payment or tenure?

• You can choose to either reduce your monthly payment while keeping the tenure the same, or reduce your loan tenure while keeping the monthly payment the same. Both options save interest, but reducing tenure usually saves more.

• What are the benefits of prepaying a loan?

• Reduces total interest paid over the life of the loan
• Can help you become debt-free sooner
• Improves your credit profile
• Provides financial flexibility in the future

• Are there any risks or downsides to prepayment?

• Some loans have prepayment penalties or restrictions
• You may lose out on tax benefits associated with certain loans
• Using all your savings for prepayment may leave you with insufficient emergency funds
• Consider alternative investment opportunities before prepaying

• When is the best time to prepay a loan?

• Prepaying earlier in the loan tenure saves more interest, as interest is front-loaded in most loans
• Align prepayments with bonuses, tax refunds, or other windfalls
• Check your loan agreement for timing restrictions or penalties

• Should I reduce my monthly payment or tenure when prepaying?

• Reducing tenure usually results in greater interest savings, but higher monthly outflows
• Reducing your monthly payment lowers your monthly burden, but saves less on interest
• Choose based on your financial goals and cash flow needs

• Can I make multiple prepayments?

• Yes, most lenders allow multiple prepayments, but check for any restrictions or minimum amounts
• Track your prepayments and their impact on your loan schedule

• How do I know if prepayment is right for me?

• Compare the interest saved by prepaying with potential returns from alternative investments
• Consider your overall financial plan, risk tolerance, and liquidity needs
• Consult a financial advisor if unsure