Prepayment Strategy Calculator
Got a bonus to put toward your loan? Compare reducing your EMI vs reducing your tenure, side by side.
After a ₹3,00,000 prepayment: reduce tenure vs reduce EMI
| Metric | Reduce Tenure (same EMI) | Reduce EMI (same tenure) |
|---|---|---|
| New EMI | ₹21,696 | ₹18,979 |
| New Remaining Tenure | 13 yr 8 mo | 18 yr |
| Remaining Interest | ₹14,54,697 | ₹20,03,418 |
Reducing tenure (keeping the EMI the same) almost always saves more total interest than reducing the EMI — the trade-off is that your monthly cash flow doesn’t improve immediately. Reducing EMI helps if you need the monthly breathing room instead.
Goal-seek: debt-free in 10 years
Keeping your current EMI of ₹21,696, the lump sum you’d need to prepay today to close this loan in 10 years is:
Reduce tenure or reduce EMI — which is actually better?
When you make a lump-sum prepayment, most banks let you choose: keep the same EMI and finish the loan sooner (reduce tenure), or keep the original payoff date and pay a smaller EMI each month (reduce EMI). Reducing tenure almost always wins on total interest, because the loan closes faster and interest stops accruing sooner — but it doesn’t change what leaves your account each month. If your goal is long-term savings, reduce tenure; if your goal is monthly breathing room right now, reduce EMI. Neither is universally “correct” — it depends on what you actually need this money to do.
Common mistake
Assuming banks apply the “reduce tenure” option automatically. Many banks default to reducing EMI unless you explicitly request the other option — always confirm which one your lender is applying before making a prepayment.