What changes if you prepay ₹10,000 extra each month?
An extra payment reduces the balance that future interest is calculated on. The effect depends on the outstanding principal, rate, remaining term and how the lender applies the payment. This illustration keeps the EMI unchanged and shortens tenure.
By INDwise · Published 29 October 2026 · Editorial policy
Illustration: ₹40 lakh outstanding, 8.5% interest and 18 years remaining
Estimated interest saved: ₹16,06,322
| Outstanding loan balance | ₹40,00,000 |
|---|---|
| Annual interest rate | 8.5 % |
| Time period | 18 years |
| Extra monthly payment | ₹10,000 |
| Original monthly EMI | ₹36,218 |
| New total monthly payment | ₹46,218 |
| Original payoff | 216 months |
| Payoff with prepayment | 135 months |
| Time saved | 81 months |
Compare the same loan before and after
The original EMI is calculated from the outstanding balance and remaining term. The second schedule pays that EMI plus ₹10,000 every month, beginning with the next instalment. All figures use the same constant reducing-balance rate.
Interest saved is different from cash paid sooner
The extra ₹10,000 is not itself a saving: it is money committed earlier to principal. The saving shown is the difference between interest totals in the two schedules. This tool does not discount future payments or value the opportunity cost of using cash today.
Check your lender’s application of prepayments
A lender may offer a reduced EMI or reduced tenure. This example assumes reduced tenure. Confirm the actual process, permitted amounts and any applicable charges, and keep enough liquidity for your household obligations. Compare the updated lender schedule after a prepayment.
Questions about this example.
Is this a lump-sum prepayment example?
No. It assumes a recurring additional ₹10,000 every month. A single payment has a different schedule.
Does a floating-rate change affect the result?
Yes. This illustration holds the entered rate constant. Actual rate resets change both schedules and the ultimate savings.
Assumptions and references
Prepayments start with the next EMI. Constant rate, no prepayment fees, no rate changes or tax benefits included.
Examples are computed from the same calculator functions as the interactive tools. Software checks do not constitute a personalised tax or investment review.