Prepaying a loan: a shorter term or a lower payment.
Paying part of a loan early can end it sooner or lower the payment. The two side by side, with the interest each leaves, without choosing for you.
By Suraj Kumar3 min read
A part payment gives you a choice. Here are both, in numbers.
Two choices.
Keep paying the same and the loan ends sooner; keep the end date and the payment falls. On ₹10 lakh at 8.5% over 20 years, ₹1 lakh after a year ends it four years sooner, or lowers the EMI to ₹7,792.79.
The interest each leaves.
Ending sooner leaves about ₹2.19 lakh less interest to pay than paying less in that example, because the balance falls faster.
Charges.
Some loans charge for prepaying; the page assumes none, so check your loan's terms.
Further reading
Topics: prepayment calculator · reduce emi or tenure · part payment · home loan prepayment · loan prepayment
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