The Prepayment Outcome Side-by-Side Simulator shows your new EMI, new tenure, and real interest saved — before you call the bank.
The Prepayment Outcome Side-by-Side Simulator shows you exactly what happens when you make a lump-sum prepayment on a loan — side by side, in one screen. Instead of guessing whether to cut your EMI or cut your tenure, you see the new EMI, the new tenure, and the exact interest saved under each choice, calculated on your own loan numbers.
This is a free calculator for home loan, personal loan, car loan, and business loan borrowers in India who have a lump sum ready to put towards their loan and want to know the real outcome before calling the bank. It's built for salaried employees, freelancers, small business owners, and NRIs repaying Indian loans, as well as CAs and advocates who advise clients on debt repayment decisions. Enter your outstanding loan, rate, remaining tenure, and prepayment amount — the tool instantly compares "reduce EMI" against "reduce tenure" so you can pick the option that suits your cash flow.
The simulator uses the standard reducing-balance EMI formula, applied twice on the same prepayment:
EMI = P × r × (1 + r)^n / [(1 + r)^n − 1]
where:
P = outstanding principal
r = monthly interest rate (annual rate ÷ 12 ÷ 100)
n = remaining tenure in months
After you enter a prepayment amount, the principal drops to P − prepayment. The tool then runs this formula twice:
n fixed and recalculates EMI on the lower principal.n.Whether your bank can charge a fee for this prepayment is a separate question, governed by the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 — notification RBI/2025-26/64 dated 2 July 2025. It bars regulated entities from levying pre-payment or foreclosure charges on floating-rate loans given to individuals for non-business purposes, effective for loans sanctioned or renewed on or after 1 January 2026. Fixed-rate loans, foreign-currency loans, and some structured credit remain outside this exemption, and lenders there may still levy a disclosed, board-approved charge — which is why the simulator has an optional charge-percentage field.
Say your home loan has an outstanding balance of ₹30,00,000, an interest rate of 8.5% p.a., and 180 months (15 years) left. You have ₹3,00,000 ready to prepay, and it's a floating-rate loan, so the charge is 0%.
On the same prepayment, keeping the EMI unchanged and shortening tenure saves roughly three times more interest than lowering the EMI — because the extra amount keeps working at the same repayment pace instead of stretching over more months.
From 1 January 2026, the RBI (Pre-payment Charges on Loans) Directions, 2025 apply uniformly to all floating-rate loans and advances sanctioned or renewed on or after that date. Individual, non-business borrowers pay no prepayment or foreclosure charge regardless of lender type. The same no-charge rule now extends to floating-rate business loans taken by individuals and MSEs, subject to the lender's category and loan size. These Directions consolidate and override the earlier 2012 and 2014 RBI circulars into one framework, and require lenders to disclose any applicable charge upfront in the sanction letter, loan agreement, and Key Facts Statement — no retrospective or undisclosed charges are allowed. If your prepaid loan doesn't fall under this exemption (fixed-rate, foreign-currency, or select structured credit), always check your sanction letter for the exact charge before running the numbers.
Yes, prepaying principal always cuts total interest since interest is charged only on the outstanding balance. How much you save depends on whether you reduce EMI or tenure — reducing tenure while keeping EMI unchanged usually saves more, as this example shows.
If your monthly cash flow is tight, a lower EMI helps immediately. If you can comfortably continue the same EMI, shortening the tenure saves significantly more interest over the loan's life, as the side-by-side comparison shows.
No. Under the RBI (Pre-payment Charges on Loans) Directions, 2025, floating-rate loans given to individuals for non-business purposes cannot carry a prepayment or foreclosure charge, for loans sanctioned or renewed on or after 1 January 2026.
Yes. Fixed-rate loans, foreign-currency loans, and certain structured credit sit outside the RBI's no-charge rule, so lenders can levy a disclosed, board-approved fee. Enter that percentage in the simulator's charge field to see the net benefit after the fee.
That depends on your liquidity needs and other financial goals. A partial prepayment keeps some funds free while still cutting interest; a full closure removes the EMI obligation entirely. Use this simulator for the partial case, and compare against your foreclosure quote for full closure.
No — this tool focuses purely on the loan-side EMI/tenure/interest outcome. For the tax-deduction angle on a jointly owned home loan, check the Joint Home Loan Tax Benefit Calculator on Toolisky.
Because you keep paying the same, higher EMI amount every month on a smaller principal — more of each payment goes toward principal sooner. Reducing EMI instead stretches the same prepayment benefit over the original number of months, so the effective saving is lower.
Calculations verified by our team including CA Anita Patil. View our full accuracy policy and meet the team →
For informational purposes only. Results are estimates based on the inputs you provide and the rules in effect for the period shown, and are not tax, legal or financial advice. Verify figures against the relevant official source and consult a qualified professional before acting on them. Accuracy & limitations
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