How Loan Prepayment Reduces EMI and Tenure
Updated · 6–8 minute read
How Prepayment Affects Your EMI and Tenure
Prepayment is an extra payment you make towards your loan apart from your regular EMI. Depending on your lender, you can choose to reduce the EMI amount or shorten the remaining tenure.
Two Ways Prepayment Helps
- Reduce EMI: Keep the tenure same; monthly EMI goes down.
- Reduce Tenure: Keep EMI same; you finish the loan faster and pay less interest overall.
When Should You Prepay?
- Early in the loan (higher interest savings).
- When you receive bonuses or windfalls.
- After checking any prepayment charges with your lender.
Try an Example
Open with values and tweak prepayment in the calculator:
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