Two ways to cut interest: pay a lower rate, or pay off faster. One calculator for each, and a straight answer on which suits you.
Two tools on one page. See what a lower rate saves you, and what one lump-sum payment today takes off your future interest bill.
Interest is the quietest expense most households carry. It never arrives as a bill. It just sits inside every EMI, and unless you look for it, you never see how large it is.
On a ₹5 lakh loan run over five years at 20%, you can end up paying well over ₹2.5 lakh in interest alone. That is money that bought you nothing.
There are exactly two ways to reduce it once a loan is running. Pay a lower rate, or pay it off faster. This page has a calculator for each.
Two ways only. Switch to a loan with a lower interest rate, which reduces what you are charged each month. Or make a lump-sum prepayment, which reduces the balance the interest is calculated on. Both work, and they work together.
Everything else — changing the EMI date, restructuring, taking a longer tenure — either does nothing to your interest cost or increases it.
Use this if you are considering consolidating or refinancing an existing debt.
Enter what you owe now, the rate you pay, and the EMI you pay. Then the new terms on offer.
Difference in total interest from here on
Indicative only. Processing and foreclosure charges are not included. Nothing you type is saved or sent anywhere.
Use this if you have a bonus, a maturing deposit or any windfall and are wondering whether to put it into your loan.
Keep the EMI the same after prepaying. That is what makes the loan finish early.
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Indicative only. Most lenders charge 2% to 5% of the outstanding for prepayment — check your agreement, because that charge comes off the saving shown.
💡 Did You Know?
Prepaying early in a loan saves far more than prepaying late. In the first year, most of your EMI is interest and very little touches the principal. A lump sum then removes principal that would have been charged interest for years. The same amount paid in the final year removes almost nothing, because you have already paid the interest.
They solve different problems, and the right answer depends on your situation.
| Your situation | Better move | Why |
|---|---|---|
| Paying 30%+ on card debt | Switch | The rate gap is doing all the damage. Fix the rate first. |
| One loan at 14%, and you have a bonus | Prepay | The rate is already reasonable. Reduce the balance instead. |
| Several debts at different rates | Switch, then prepay | Consolidate to one lower rate, then attack the balance. |
| Loan has under a year left | Prepay if you can, do not switch | Refinancing restarts the interest-heavy phase. |
| No spare cash, high rate | Switch | Prepaying is not an option, so the rate is your only lever. |
| Rate is low and you have no emergency fund | Neither yet | Build three months of expenses in savings first. |
🧠 Expert Insight
When you prepay, ask the lender to reduce the tenure rather than the EMI. Most banks default to reducing the EMI, because it feels generous. It is the weaker option — keeping the EMI the same and shortening the loan saves considerably more interest. You usually have to ask for it in writing.
A fair question, and the answer is simpler than most people make it.
Prepaying a loan gives you a guaranteed, risk-free return equal to your interest rate. If your loan is at 14%, prepaying earns you 14%, certain.
An investment has to beat 14% after tax, consistently, with risk, to be the better choice. Very few do.
So the general rule:
Two things come before both, though. Keep an emergency fund — money in a loan cannot be withdrawn in a crisis. And clear any credit card balance first, since nothing you can invest in will match 40%.
Both routes have costs that can eat the saving. Check these before you act.
The saving figures above are before all of these. Subtract them to get the real benefit.
Meera runs a small boutique in Indore. She had ₹5,00,000 outstanding across a personal loan and a credit card, at a blended rate of roughly 24%, and was paying about ₹16,000 a month.
She looked at both options.
Switching: she was offered 14% over 42 months, close to what her current debts had left. The interest saving was substantial, because the gap between 24% and 14% on a balance that size is large.
Prepaying: she also had ₹1,00,000 from a good festive season. Putting that into the new loan, keeping the EMI unchanged, took a further chunk off the interest and pulled the finish date forward.
She did both, in that order. Switch first to fix the rate, then prepay to attack the balance. She checked the foreclosure charges on her old loan first and factored them in before deciding.
(This example is for explanation only. Put your own numbers into both calculators above.)
✅ Answers: across all my debts, does one loan cost less?
Q1. What is the fastest way to save interest on a loan?
Lower the rate, or lower the balance. Switching to a cheaper loan fixes the rate. A lump-sum prepayment fixes the balance. Doing both, in that order, saves the most.
Q2. Should I reduce the EMI or the tenure when I prepay?
Reduce the tenure. Keeping the EMI the same and shortening the loan saves considerably more interest. Most lenders default to reducing the EMI, so you have to ask for tenure reduction in writing.
Q3. Is it better to prepay or to invest the money?
Prepaying gives a guaranteed return equal to your loan rate. If the loan is above 12%, prepaying almost always wins. Below 8%, with a tax benefit, investing often wins. Clear card debt before considering either.
Q4. When is the best time to prepay?
As early as possible. Early EMIs are mostly interest, so a lump sum then removes principal that would have carried interest for years. The same amount in the final year saves very little.
Q5. What does prepayment cost?
Usually 2% to 5% of the outstanding, typically after a lock-in of 6 to 12 EMIs. Some lenders charge nothing on floating-rate loans. Check your loan agreement.
Q6. Why does the switching calculator sometimes show extra interest?
Because the new tenure you entered is longer than what your current debt has left. A lower rate over a much longer period can still total more. Shorten the tenure and watch it turn positive.
Q7. Should I use my emergency fund to prepay?
No. Money paid into a loan cannot be taken back out when a crisis comes. Keep three months of expenses aside first, then prepay from what is genuinely spare.
Q8. Can I make part-payments whenever I want?
Most lenders allow it after a lock-in, but many cap how often per year or set a minimum amount. Ask about these limits before you plan around them.
Q9. Do the calculators include charges?
No. Both show interest only. Subtract any foreclosure charge, processing fee and GST to get the real net benefit.
Q10. Does prepaying improve my credit score?
Closing a loan is recorded positively, and a lower overall debt level helps. The bigger effect comes from clearing credit card balances, which improves your credit utilisation ratio directly.
Q11. Which loan should I prepay first if I have several?
The one with the highest interest rate, almost always the credit card. Clearing a 40% debt saves far more than clearing an 11% one, whatever the balances look like.
Q12. Should I prepay my home loan?
Usually the lowest priority. Home loans carry low rates and often a tax benefit. Clear cards and personal loans first, then decide about the home loan.
Q13. Why does the calculator say my EMI is too low?
Because your monthly payment does not cover the interest being charged, so the balance grows rather than shrinks. That situation needs either a higher payment or a much lower rate, urgently.
Q14. Is my data stored?
No. Everything runs in your own browser. Nothing is sent anywhere or saved.
Interest is invisible until you measure it. Once you do, the two levers are obvious: pay less for the money, or borrow it for less time.
If your rate is high, switching is the bigger win and the more urgent one. If your rate is already fair, prepaying is the better use of any spare money — and remember to ask for tenure reduction, not EMI reduction. Check the charges on both sides before you move, keep an emergency fund intact, and always clear the most expensive debt first.
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Calculator Disclaimer
These tools give indicative estimates for general information, not financial advice. They exclude prepayment charges, foreclosure charges, processing fees, GST and taxes. Prepayment rules and charges differ between lenders. Please check your loan agreement and speak to your lender before acting on these figures.
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