Free Loan Calculator

The standard reducing-balance EMI formula: EMI = P × r × (1 + r)^n / ((1 + r)^n - 1), where P is principal, r is monthly rate (annual / 12 / 100), and n is total months. The same formula every Indian and Western bank uses.

In this calculator, prepayment reduces tenure while keeping EMI fixed. That is the more common option offered by banks because it produces the highest interest savings. Some banks let you choose to reduce EMI instead, in which case the tenure stays the same and the EMI reduces from the next month.

In a fresh loan, the outstanding balance is at its maximum, so interest in the first months consumes most of the EMI. The principal portion grows each month as the balance shrinks. Halfway through a 20-year loan you are paying roughly half interest and half principal. Toward the end, almost the entire EMI is principal.

A lot, if you do it early. ₹5000 extra per month on a ₹50 lakh, 20-year loan at 8.5% saves roughly 4 years and several lakhs of interest. The earlier in the tenure you prepay, the bigger the saving, because you reduce the balance during the high-interest portion of the schedule.

Look at total cost paid, not just EMI. A lower EMI with a longer tenure usually means more total interest. The comparison row in the tool flags which loan wins on each metric (EMI, total interest, months to close). Pick based on what you care about most: lowest cash outflow per month or lowest total cost.

The math is the same as banks use for reducing-balance loans. Banks may add small differences for processing fees, GST on fees, late-payment charges, and how they round to paise. The principle is identical and the differences are usually under 0.5%.