EMI calculator with prepayment

Home loans, and most car and personal loans from banks, use the reducing-balance method. The EMI is fixed, but each month the interest is charged only on what you still owe, so early EMIs are mostly interest and later ones mostly principal. (Some lenders quote a flat rate instead, which charges interest on the full original amount throughout — ask which one yours uses.)

EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

Here P is the loan amount, r is the monthly interest rate (the annual rate ÷ 12 ÷ 100) and n is the number of monthly instalments.

For example, a ₹25,00,000 loan at 8.5% for 20 years has an EMI of ₹21,696. Over the full term you would pay ₹27,06,939 in interest — more than the amount you borrowed.

When you prepay, most lenders let you choose. Take the same loan and prepay ₹3,00,000 after three years:

• Keep the EMI: the loan ends after 15 years 11 months instead of 20 years, saving about ₹7,63,426 in interest.
• Keep the end date: the EMI drops to ₹18,911, saving about ₹2,68,115.

Shortening the tenure almost always saves more, because the balance stops accruing interest sooner. Lowering the EMI is the better choice when monthly cash flow is tight. Before prepaying, check whether your lender charges for it: many floating-rate loans to individuals carry no charge, but fixed-rate loans often do.

A calculator tells you the EMI once. Becom's budget and EMI planner carries each loan forward every month, advances it by one instalment and shows what is still outstanding — alongside your income, spending and savings rate.