Formula used
Both options start after the same principal prepayment. The lower-EMI option keeps the original remaining tenure and recalculates EMI. The shorter-tenure option keeps the original EMI and solves the remaining payment count, allowing a like-for-like interest comparison.
Example calculation
For Rs 50 lakh outstanding at 8.5% with 180 months left, test a Rs 5 lakh prepayment. Lower EMI improves monthly cash flow; keeping EMI unchanged usually saves more interest and closes the loan sooner.
How to use this calculator
- Enter principal outstanding, current rate and remaining months.
- Enter the amount you plan to prepay.
- Compare the recalculated EMI with the solved shorter tenure.
- Review interest under both options and the extra saving from shorter tenure.
- Confirm the chosen instruction and revised schedule with the lender.
Important assumptions
- The rate remains unchanged after prepayment.
- The lower-EMI option retains the original remaining tenure.
- The shorter-tenure option retains the original EMI.
- Charges, daily interest and tax benefits are excluded.
Common mistakes to avoid
- Assuming the lender will apply the preferred option automatically.
- Comparing only EMI relief and ignoring total interest.
- Prepaying before protecting emergency liquidity.
- Using an outdated principal, rate or remaining tenure.