Reduce EMI vs Tenure
Reduce EMI or Tenure After Prepayment?
Compare lower monthly EMI with shorter loan tenure after prepayment and see which option saves more interest.
Direct answer
Should I reduce EMI or tenure after making a prepayment?
Keeping EMI unchanged generally closes the loan sooner and saves more interest. Reducing EMI provides immediate monthly relief and may be preferable when income is uncertain or cash flow is stretched.
Worked example
Apply the same Rs 5 lakh prepayment to both options: one recalculates EMI over the old tenure, while the other solves a shorter tenure at the old EMI.
What to check
- Use the same prepayment in both scenarios.
- Compare total remaining interest.
- Ask the lender to apply your chosen option.
How the calculator approaches it
- 1.Apply the prepayment to current principal.
- 2.Recalculate EMI while preserving the original remaining tenure.
- 3.Separately solve the new tenure while preserving the original EMI.
- 4.Compare monthly relief, months saved and total remaining interest.
Important limitation
The lender may not apply your preferred option automatically. Submit instructions and verify the revised amortisation schedule and any applicable charge.
Primary sources
Related questions
FAQs
Should I reduce EMI or tenure after making a prepayment?
Keeping EMI unchanged generally closes the loan sooner and saves more interest. Reducing EMI provides immediate monthly relief and may be preferable when income is uncertain or cash flow is stretched.
Which calculator should I use for this question?
Use RupeeKit's Reduce EMI vs Tenure Calculator India and replace the example with your own current figures.
Source, Methodology & Educational Disclaimer
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