Loan prepayment is the process of repaying your loan amount before the scheduled due date, either in part (partial prepayment) or in full (full prepayment). It involves paying an extra sum towards the principal loan balance, which reduces either your loan tenure, EMI, or both — depending on the lender's policy or your preference.

⚠️ Things to Consider Before Prepaying

Prepayment Charges

Most floating rate loans (e.g., home loans in India) have zero prepayment penalties. But fixed-rate loans might charge 1–2%.

Opportunity Cost

Consider whether investing the prepayment amount elsewhere (e.g., stocks, mutual funds) gives higher returns than interest saved.

Liquidity

Ensure you maintain enough emergency funds before parting with a large prepayment amount.

Income Tax Impact

Home loan interest is tax-deductible. Prepaying may reduce your deductions under Section 24 or 80C in India.

Lender Policies

Some lenders adjust prepayments differently (e.g., annual recalculations, fixed EMI models). Always clarify with your lender.

✅ Benefits of Prepayment

Save on Interest

Reduces your total outflow, especially for long-term loans like home loans.

Faster Loan Closure

Reduces debt obligations early and improves peace of mind.

Improved Credit Score

Timely and early repayments reflect positively in your credit history.

Better Financial Flexibility

Frees up funds for other investments or goals.

Tax Strategy

Reducing your home loan interest can affect tax deductions (for salaried individuals using Section 24), but may be beneficial if you're out of the tax-saving bracket.

Disclaimer:

The loan prepayment calculator and financial tools provided on this website are for informational purposes only and do not constitute financial advice. Actual loan outcomes may vary based on your lender’s terms and policies. Please consult your bank or financial advisor before making prepayment decisions. We are not liable for any financial loss resulting from use of these tools.