Compare reduce-tenure vs reduce-EMI, with prepayment charges and GST factored in. All figures are indicative. Your inputs stay on this device.
After — EMIs paid, the figures above compare your loan with and without this prepayment. Reduce-tenure keeps the same EMI and ends the loan sooner; reduce-EMI keeps the same end date and lowers the monthly outgo.
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After you have paid k of the original N EMIs, the outstanding balance on a loan of principal P at monthly rate r (= annual rate ÷ 12 ÷ 100) is:
Outstanding = P · ((1+r)^N − (1+r)^k) ÷ ((1+r)^N − 1)Results are indicative estimates based on the inputs you entered and the assumptions above. Actual interest rate, EMI, eligibility, prepayment charges and tax benefits are determined by the lender and applicable law at the time of disbursal. Tarsariya Financial Services LLP is a financial-services intermediary and not a lender. For a personalized assessment, please reach out to our advisor.
Thinking of prepaying? Let's check the fine print together:
If your goal is to pay the least total interest, choose reduce-tenure: you keep the same EMI and the loan simply ends sooner, so interest is charged for fewer months. Reduce-EMI instead keeps the original end date and lowers your monthly outgo, which helps cash flow but saves less interest overall. For most borrowers who can comfortably afford the current EMI, reducing the tenure is the better deal.
The RBI prohibits prepayment and foreclosure charges on floating-rate loans taken by individuals for non-business purposes — most notably floating-rate home loans — so for those you should set the charge to 0%. For fixed-rate loans, personal loans and many business loans, lenders may levy a charge (commonly 2% to 5% of the amount prepaid) plus 18% GST. Always confirm the exact policy in your sanction letter.
Prepayment is most rewarding early in the loan, when the outstanding balance and the interest component of each EMI are highest. Compare the interest you save against any prepayment charge plus GST, and against what the same money could earn elsewhere after tax. If the net interest saved comfortably exceeds the charges and you are not sacrificing an emergency fund or a higher-return investment, prepaying usually makes sense.
A partial prepayment is a lump sum paid towards the outstanding principal while the loan continues — you then choose to either shorten the tenure or lower the EMI. Full foreclosure is closing the loan entirely by repaying the whole outstanding balance in one go, after which you collect your original property or security documents and a no-dues certificate. Charges, where applicable, may differ between partial prepayment and full foreclosure, so check both in your loan agreement.
They are close, indicative estimates. We assume a fixed interest rate, on-time EMIs and standard monthly-reducing-balance maths. Your actual figures can differ because of rate resets on floating loans, the exact day-count and value date of your prepayment, rounding by the lender, and the precise charge and GST applied. Treat this as a planning tool and confirm the final amounts with your lender before you prepay.
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