Loan Prepayment Calculator

Paying extra into a loan does one of two things, and they are not worth the same. Your lender either cuts the monthly payment and keeps the end date, or keeps the payment and brings the end date forward. This shows both outcomes from the same money, side by side, along with the gap between them.

Why does it show both outcomes?

Because the question people are actually asking is which of the two is worth more, and that needs both numbers in view at once. No calculator we could find puts them together.

Fifteen working Indian tools that model paying extra or closing early were opened and read across six separate passes in August 2026. Six let you choose between cutting the EMI and cutting the tenure: ICICI, Kotak, Aavas, Axis Finance, Hero Housing and smartemicalc. That part of the field is healthier than expected.

What none of the fifteen does is show the two together. Every one of the six is a tab or a radio button, so you pick, read a number, switch, and read again while holding the first figure in your head. The comparison happens in your memory, which is exactly where it is least reliable.

Five more pick a side for you without saying so. ClearTax only ever reduces the EMI. 1finance only ever reduces the tenure, telling you outright that your EMI stays the same. Fisdom prints no tenure figure at all. Bajaj ships an EMI-only widget while its own page promises the calculator "helps you decide whether to reduce your EMI amount or shorten the loan tenure".

The six that offer the choice cannot agree on a default either. ICICI and smartemicalc open on tenure reduction. Aavas and Kotak open on EMI reduction, the option that saves less. Axis Finance frames it inverted from all of them, as what you keep rather than what you cut, with tabs reading Keep Existing EMI and Keep Existing Tenure.

Which one saves more?

Cutting the tenure saves more interest, usually by a wide margin, because the payment stays high while the balance falls. Cutting the EMI spreads a smaller balance over the same number of months, so the loan still runs its full course.

The calculator's starting figures show the size of it. On a Rs 40,00,000 balance at 8.75% with 180 months to run, a one-off Rs 2,00,000 part-payment saves Rs 4,91,515 in interest and ends the loan 17 months early if it cuts the tenure. The same Rs 2,00,000 saves Rs 1,58,772 and takes Rs 2,004 off the monthly payment if it cuts the EMI. A gap of Rs 3,32,743 from one administrative choice.

That is the arithmetic, and it is not the whole decision. A lower EMI is worth something real if the monthly budget is tight, and Rs 2,004 a month back in your hands has its own use. What the calculator can do is stop the trade being invisible.

Does a prepayment charge apply at all?

In India that depends on three conditions holding at the same time, and no calculator we surveyed asks about any of them. The rule is recent enough that most pages still describe the position that preceded it.

The Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, issued on 2 July 2025, bar a lender from levying pre-payment charges where the loan carries a floating rate, the borrower is an individual, and the purpose is something other than business. It applies to loans sanctioned or renewed on or after 1 January 2026, and covers commercial banks other than payments banks, co-operative banks, NBFCs and All India Financial Institutions.

Three details in the text do real work. The protection holds whether you prepay in part or in full, it holds whatever the money came from, which ends the old practice of waiving the fee on your own savings but charging it on a switch to another lender, and it holds with no minimum lock-in period.

The trap is the opening line of that paragraph, which covers floating-rate loans only. A fixed-rate loan gets no protection from it, and most Indian personal loans are fixed rate, which is to say the charge survives on many of the loans people most want to clear early. That is why the calculator asks the rate type before it quotes anything.

HDFC's published home loan terms show the split working in practice. Its premature closure charges are nil on adjustable rate loans, and 2% plus applicable taxes on fixed rate loans, except where the prepayment comes from what it calls own sources, meaning any money not borrowed from another bank, housing finance company or NBFC. It reserves the right to ask for documents proving where the money came from.

Read those two lines together and something subtle falls out. The RBI ended the own-funds-versus-borrowed distinction, but only for floating-rate loans, so on the fixed-rate leg it survives untouched. A fixed-rate borrower paying from savings and a fixed-rate borrower refinancing elsewhere can face different charges on the same loan, quite lawfully.

What is the charge worked out on?

On the amount being prepaid, not on the outstanding balance, and the difference is large. The Directions state that for term loans, a pre-payment charge, where one is levied, has to be based on the amount being prepaid.

A 2% charge on a Rs 2,00,000 part-payment against a Rs 40,00,000 loan comes to Rs 4,000, or Rs 4,720 once 18% GST lands on it. Worked out on the outstanding balance instead, the same charge reads Rs 94,400. That is a twentyfold difference on identical inputs.

Published guidance keeps using the wrong base. One widely-read aggregator states the charge twice on the same page, as 2% to 2.50% of the principal outstanding and as 2% to 3% of the outstanding loan amount. Neither matches what the Directions require for a term loan.

Two of the fifteen tools have a charge field at all. 1finance takes a percentage and then deducts it from your prepayment instead of adding it to what you pay out, so a bigger charge makes the prepayment smaller instead of making the exercise dearer. loancalculatoronline.org models a charge correctly, but only for closing the loan outright, where the amount prepaid and the outstanding balance are the same figure and the distinction never arises. Among tools that handle a genuine part-payment, nobody charges a fee at all.

And not one of the fifteen mentions the 18% GST that lands on top of the charge. That was checked by string count on every page across all six passes, and it came back zero every time.

Who actually decides, you or the lender?

The loan agreement usually reserves that decision to the lender, even where the same lender's calculator page invites you to choose. Those two documents are not written by the same department, and only one of them binds anybody.

ICICI is the clearest case because both layers are public. Its registered Standard Terms governing property facilities provide that where a part prepayment is permitted, the lender shall be entitled to amend the repayment schedule or the amount of instalments. Schedule means tenure and instalment means EMI, so the contract covers both and gives the borrower neither. On its prepayment calculator page the same bank offers Reduce Tenure and Reduce EMI tabs and says the choice depends on the borrower's preference.

The other large lenders simply do not say. HDFC publishes its premature closure charges in detail, down to the difference between adjustable and fixed rate loans, and says nothing about what a part-payment does to your EMI or your tenure. SBI's home loan pages are silent on prepayment mechanics altogether. Neither silence breaks any rule: the RBI requires lenders to disclose whether charges apply, and says nothing about disclosing which way the loan is re-cut afterwards.

So the charge is a published term and the consequence is not, which is a strange asymmetry when the consequence is worth more money. Asking in writing before you pay costs nothing and is the only way to find out.

Is there a third route?

Yes, and it gets you the tenure outcome without asking for it: let the lender cut the EMI, then carry on paying the old amount anyway. The difference goes to principal every month, so a single part-payment quietly becomes a standing one.

A lender's own guide describes this route and recommends asking whether you can keep the previous instalment after a part-payment, because not every lender makes it simple to arrange. No calculator we surveyed models it, including that lender's own. Set the frequency in the calculator above to every month and you can see roughly what it does.

What this calculator does not do

It does not tell you whether to prepay, and it deliberately stays out of the argument about investing the money instead. Comparing a guaranteed interest saving against an uncertain market return is investment advice, and it depends on things a page cannot see. A SEBI-registered investment adviser is the right person for that question.

It also assumes your lender permits the part-payment you enter, and lenders publish those limits very unevenly. ICICI states both a minimum and the absence of a cap: for loans from 1 January 2026 the smallest part-payment is one EMI, down from three before that date, the maximum is the outstanding less one EMI, and part-payments may be made any number of times in a financial year. SBI publishes no minimum, no cap and no lock-in for either its home loan or its personal loan. Your sanction letter and the Key Facts Statement are where your own answer lives, and the RBI requires the applicability of pre-payment charges to be disclosed in both.

For a different question, the debt consolidation calculator covers replacing several debts with one new loan, and the snowball and avalanche calculator covers which debt to clear first when you have more than one. This page is for a single loan you already hold.

Pair this with the guide

What Is a Personal Loan? Rates, EMIs and the Prepay Rule covers what the rate you were quoted actually costs, how the prepay rule reads in practice, and where a personal loan sits against a credit card. The calculator answers what a payment does. The post explains the loan it is going into.

Frequently asked questions

Sources

• Reserve Bank of India, Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 (RBI/2025-26/64, issued 2 July 2025; paragraph 5 on floating rate loans, paragraph 5(iii) on part prepayment, source of funds and lock-in, paragraph 6 on the charging base for term loans, paragraph 9 on disclosure in the sanction letter and Key Facts Statement), rbi.org.in
• Reserve Bank of India, Reset of Floating Interest Rate on Equated Monthly Instalments (EMI) based Personal Loans (RBI/2023-24/55, 18 August 2023, updated 1 October 2025; the borrower's choice between EMI and tenor at an interest rate reset, which is not the same as a voluntary prepayment), rbi.org.in
• Central Board of Indirect Taxes and Customs, GST rate schedule for services (financial services at 18%), cbic-gst.gov.in
• ICICI Bank, Standard Terms and Conditions Governing Facilities For and Against Properties (clause 18, on the lender's entitlement to amend the repayment schedule or instalment amount after a permitted part prepayment), and its published home loan service charges and part-payment terms, icici.bank.in
• HDFC Bank, published home loan premature closure charges (nil on adjustable rate loans, 2% plus applicable taxes on fixed rate loans except where prepaid from own sources), homeloans.hdfc.bank.in
• Observations about how other prepayment calculators handle the EMI and tenure choice, charges, GST and the charging base come from a live review of fifteen working India tools across six separate passes on 13 and 14 August 2026, reading served markup and calculator scripts rather than marketing copy. Tools inspected included ICICI, Kotak, Aavas, Axis Finance, Hero Housing Finance, Bajaj Finserv, ClearTax, Fisdom, 1 Finance, smartemicalc, emicalculator.net, Shriram Finance, Urban Money, loancalculatoronline.org and SBI, alongside editorial pages from Godrej Capital and HomeFirst.