Select a Prepayment Calculator
Understand outstanding principal reductions and tenure savings based on RBI reducing-balance guidelines.
Home Loan Prepayment
Calculate outstanding principal savings, tenure reduction, and total interest saved by prepaying your home mortgage early.
Open Calculator ➔Personal Loan Prepayment
Clear high-interest personal debt early. See how part-payments reduce your outstanding reducing-balance tenure.
Open Calculator ➔Car Loan Prepayment
Optimize vehicle loan closure. Avoid negative equity on depreciating auto assets by accelerating principal reduction.
Open Calculator ➔Education Loan Prepayment
Manage moratorium simple interest and compound EMI transitions. Calculate savings on student loan foreclosures.
Open Calculator ➔Understanding Loan Prepayment: The Power of Reducing Balance
Making a loan prepayment is one of the most powerful financial decisions you can make to lower your interest burden. When you make a part-payment or prepayment, that lump sum is deducted directly from your outstanding principal balance. As a result, the next month's interest is calculated on a significantly lower outstanding amount. This means a larger portion of your subsequent regular EMIs is used to reduce the principal rather than pay interest, accelerating your path to debt-free status.
Key Prepayment Terms: Lock-ins and Foreclosure Fees
Because banks rely on the interest yields generated by retail loans, they enforce structural constraints to discourage borrowers from prepaying:
- Lock-in Period: Most major banks (like HDFC, ICICI, SBI, and Axis Bank) enforce a lock-in period of 6 to 12 months. During this period, you are legally prohibited from making any part prepayments or closing the loan entirely.
- Part-Payment Caps: Lenders often restrict the number of part-payments you can make in a financial year (typically twice) and specify a minimum part-payment amount (e.g., minimum 3 times your monthly EMI).
- Foreclosure Charges: If you close the loan entirely before the tenure, banks charge a foreclosure fee ranging from 2% to 5% of the outstanding principal. However, under RBI guidelines, if you have a floating interest rate loan (common for home loans), banks are prohibited from charging foreclosure fees. For fixed-rate loans (like car or personal loans), the fees are fully applicable.