Extra Payment & Prepayment Savings Calculator
ā Extra Payments - Monthly or one-time prepayments cut years off loan
ā Interest Savings - Save lakhs in interest with strategic prepayment
ā Become Debt-Free - Reduce financial stress and build wealth faster
ā Flexible Strategy - Choose what works for your budget
Total months: 60
New monthly payment: ā¹10,624
A Loan Payoff Calculator shows how extra payments (monthly or one-time) reduce your loan tenure and save interest. Calculate exact savings on home loans, personal loans, car loans, or any EMI-based debt with prepayment strategies.
Our calculator features monthly extra payments (add ā¹1K-10K to EMI) or one-time lump sum (bonus/windfall). Compare scenarios, view payment schedules, and learn Debt Snowball vs Avalanche strategies to become debt-free faster.
| Loan Type | Loan Details | Extra Payment | Time Saved | Interest Saved |
|---|---|---|---|---|
| Home Loan | ā¹50L, 9%, 20Y | ā¹5,000/month | 6 Years | ā¹12.8 Lakh |
| Personal Loan | ā¹5L, 15%, 5Y | ā¹2,000/month | 1.5 Years | ā¹83,000 |
| Car Loan | ā¹8L, 10%, 5Y | ā¹3,000/month | 1 Year | ā¹62,000 |
| Education Loan | ā¹10L, 12%, 10Y | ā¹2,500/month | 2.5 Years | ā¹2.1 Lakh |
| Credit Card | ā¹1L, 18%, Revolving | ā¹10,000/month | 6 Months | ā¹18,000 |
š” Key Insight: Higher interest rate loans benefit MORE from extra payments. Always prioritize credit cards and personal loans over home loans.
How It Works:
ā Pros:
ā Cons:
How It Works:
ā Pros:
ā Cons:
Scenario: You have 3 debts and ā¹5,000 extra monthly:
Credit Card
Balance: ā¹50,000
Rate: 18%
EMI: ā¹5,000
Personal Loan
Balance: ā¹2,00,000
Rate: 15%
EMI: ā¹12,000
Home Loan
Balance: ā¹40,00,000
Rate: 9%
EMI: ā¹40,000
Avalanche Order: Credit ā Personal ā Home
Total interest paid: ā¹28.4 Lakh
Time to debt-free: 14 years
Best mathematical choice
Snowball Order: Credit ā Personal ā Home
Total interest paid: ā¹29.1 Lakh
Time to debt-free: 14.5 years
Pay ā¹70K more but easier to stick
Verdict: Avalanche saves more money. But if you need quick wins for motivation, snowball works too. The best method is the one you'll actually complete!
Simple but powerful technique:
Impact Example:
ā¹10L loan at 10% for 10 years
Regular EMI: ā¹13,215
Round to: ā¹15,000 (ā¹1,785 extra)
Save ā¹1.8L interest + 2.5 years!
Systematic approach for salaried employees:
Month-by-Month Strategy:
Result: 3-5 extra EMIs paid annually without effort!
| Priority | Loan Type | Typical Rate | Why Priority | Action |
|---|---|---|---|---|
| 1 (URGENT) | Credit Card Debt | 18-36% | Highest interest, revolving debt, no tax benefit, compounds fast | Pay IMMEDIATELY. Cut expenses. Balance transfer if needed. |
| 2 (HIGH) | Personal Loan | 12-20% | Very high interest, unsecured, no tax benefit, short tenure | Aggressive prepayment. Use bonus/windfall. |
| 3 (MEDIUM) | Car Loan | 9-12% | Moderate rate, depreciating asset, no tax benefit | Prepay if rate >10%. Consider selling if underwater. |
| 4 (MEDIUM) | Education Loan | 8-12% | Moderate rate, tax deduction on interest (Section 80E), appreciating asset (skills) | Slower priority. Use tax benefit. Prepay if >10%. |
| 5 (LOW) | Home Loan | 8-10% | Lowest rate, tax deduction ā¹2L (24b+80C), appreciating asset, long tenure | LAST priority. Effective rate 6-7% after tax. Invest surplus instead. |
š” Exception: Small balance loans (>ā¹50K) - Pay off completely for mental peace regardless of rate. Psychological freedom > math sometimes!
Extra loan payments save significant interest and reduce tenure. Example: ā¹5L loan at 10% for 5 years, EMI = ā¹10,624. Regular payment: Total interest = ā¹1.37L over 60 months. With ā¹2,000 extra/month: Total interest = ā¹91,489, Save ā¹45,683 (33% less!), Payoff in 42 months instead of 60 (1.5 years faster). With ā¹5,000 extra/month: Total interest = ā¹57,813, Save ā¹79,359 (58% less!), Payoff in 33 months (2.25 years faster). Even ā¹1,000 extra monthly saves ā¹25K-30K on a ā¹5L loan. The higher the loan amount and interest rate, the more you save. Use calculator to see your exact savings based on loan details.
Both strategies work, choose based on your situation: Monthly Extra Payments: Better for regular salary earners, Automatic and disciplined, Reduces interest from month 1, Easier to budget (e.g., ā¹2K-5K extra monthly), Builds habit of debt reduction. One-Time Lump Sum: Best for bonus, tax refund, inheritance, wedding money, Bigger immediate impact on principal, Can be timed strategically (earlier = better), Reduce EMI or tenure options available. Ideal Strategy: Combine both! Pay monthly extra (ā¹1K-2K) + annual lump sum (bonus). Example: ā¹10L loan at 10% for 10Y, Monthly ā¹2K extra + Annual ā¹50K lump sum = Save ā¹3.5L interest + 4 years tenure. Start with what you can afford, even ā¹500/month matters!
Debt Snowball Method: Pay minimums on all debts, Put ALL extra money on smallest debt first, When smallest is paid off, move to next smallest, Repeat until debt-free. Pros: Quick wins boost motivation, Psychological satisfaction, Simple to follow. Cons: May pay slightly more interest. Debt Avalanche Method: Pay minimums on all debts, Put ALL extra money on highest interest rate first, When highest rate is paid, move to next highest, Mathematically optimal. Pros: Saves MOST money on interest, Faster total payoff, Financially smartest. Cons: May take longer to see first win. Which to Choose? Avalanche if disciplined & want maximum savings (recommended for most), Snowball if need motivation & psychological wins, Hybrid: Pay off ONE small debt first (motivation), then switch to avalanche. Example: 3 debts - Credit card ā¹50K at 18%, Personal loan ā¹2L at 15%, Home loan ā¹40L at 9%. Avalanche: Credit card ā Personal ā Home (saves most). Snowball: Credit card ā Personal ā Home (motivating).
RBI Guidelines (2014): NO prepayment charges on floating rate home loans (fully prepaid or part prepaid). Fixed rate home loans: Prepayment charges allowed (typically 2-3% of principal). Other loans (car, personal): Prepayment charges common (1-5%). Current Scenario in 2025: Most banks have ZERO prepayment charges on home loans (floating rate), HDFC, SBI, ICICI, Axis - all zero charges for floating, Fixed rate still has penalty (but rare in India), Personal loans: 2-5% prepayment penalty common, Car loans: 3-5% penalty typical. Before Prepaying: Check loan document for prepayment clause, Call bank to confirm current charges, Calculate if penalty is worth paying (usually yes), Get written confirmation before making payment. Example: ā¹10L prepayment saves ā¹2L interest. Even with 3% penalty (ā¹30K), net saving = ā¹1.7L. Pro Tip: Many banks waive penalty if prepaying with their own loan/product.
Priority Order (Avalanche Method - Math Optimal): 1. Credit Card Debt: 18-36% interest - HIGHEST priority, Even ā¹50K credit card debt costs ā¹18K/year in interest!, Pay this off IMMEDIATELY - no exceptions. 2. Personal Loan: 12-20% interest - HIGH priority, Unsecured debt with no tax benefits, ā¹5L personal loan at 15% = ā¹75K annual interest, Should be paid before home loan. 3. Car Loan: 9-12% interest - MEDIUM priority, Depreciating asset, no tax benefit, Payoff if interest rate > 10%. 4. Education Loan: 8-12% interest - MEDIUM priority, Tax deduction available on interest (Section 80E), Can be slower to pay if < 10% rate. 5. Home Loan: 8-10% interest - LOWEST priority (paradox!), Tax deduction up to ā¹2L (Section 24b + 80C), Appreciating asset, Lowest effective rate after tax (6-7%), Pay only if rate > 10% or no tax benefit applicable. Exception to Rule: Small balance loans - Pay off completely for peace of mind regardless of rate, High stress debts - Mental peace > math sometimes. Example: Have ā¹50K - Pay credit card fully, not ā¹50K home loan prepayment.
5-Year Debt-Free Plan: Step 1 - List All Debts: Write loan type, balance, rate, EMI, remaining tenure. Calculate total debt and monthly EMI commitment. Step 2 - Build ā¹50K Emergency Fund First: Before aggressive debt pay, save ā¹50K-1L for emergencies, Prevents new debt when unexpected expense hits. Step 3 - Choose Strategy: Avalanche method (highest rate first) or Snowball (smallest balance). Most effective: Avalanche for maximum savings. Step 4 - Calculate Extra Payment Capacity: List all income sources, Cut unnecessary expenses (subscriptions, dining out), Target 20-30% of income for extra debt payment, Example: ā¹50K income ā ā¹10K-15K for extra payment. Step 5 - Aggressive Execution: Pay minimums on all debts, Put ALL extra money on priority debt (highest rate), Use bonuses, increments for lump sum prepayment, Negotiate salary increase (put 100% towards debt). Step 6 - Track Progress: Review monthly, celebrate milestones, Update calculator quarterly. Example Success Story: Total debt: ā¹8L (credit card ā¹1L, personal ā¹2L, car ā¹5L), Monthly EMI: ā¹25K, Extra payment capacity: ā¹10K/month, Year 1: Clear credit card (ā¹1L) + ā¹1.2L personal loan, Year 2-3: Clear remaining personal loan (ā¹80K) + ā¹3L car loan, Year 4-5: Clear remaining car loan (ā¹2L). Debt-free in 5 years instead of 7+ years! Saved ā¹2-3L in interest.