What is a Personal Loan Prepayment Calculator?

• Achieve Debt Freedom Quickly
  By using our personal loan prepayment calculator, you can plan to make extra payments towards your loan principal. This helps you reduce your debt faster and lowers the stress associated with carrying debt. As you make prepayments, the principal amount decreases, which in turn reduces your EMI (Equated Monthly Instalment) payments.
• Reduce Financial Burden
  Prepaying your personal loan doesn’t require paying off the entire amount at once. You can make partial prepayments, which significantly reduce your outstanding debt. Although this may not immediately reduce the total interest paid, it does decrease the principal amount, thereby lowering the remaining EMI payments.
• Save on Interest Costs
  If you have enough funds, you can pay off your loan early in its tenure to save on interest. Many banks and financial institutions impose a one-year lock-in period, during which you cannot make prepayments. However, once this period ends, you can make prepayments to reduce your remaining loan balance and save a considerable amount on interest over the loan term.

A personal loan prepayment calculator helps adjust your EMI requirements when you make extra payments towards your loan. Here’s how it functions

• Input Loan Details: Enter the loan amount, tenure, and interest rate into the calculator.

• Existing Loan Information: If you’re already repaying a personal loan, input details such as the remaining loan balance, the EMIs paid to date, the prepayment amount, the interest rate, and the remaining loan tenure.

• Calculate Savings: The calculator will show you how much money you can save on your EMIs by making a prepayment.

Follow these steps to effectively use the prepayment calculator:

1. Input the principal loan amount you intend to borrow
2. Specify the duration for which you need the loan
3. Provide the interest rate offered by your chosen bank
4. Indicate the amount you wish to prepay

After entering these details, the calculator will display the revised loan tenure and other relevant information on your screen.

The following factors can affect personal loan prepayments:
Interest Rate
Personal loans typically have higher interest rates compared to other loans. Therefore, prepaying the principal amount can be advantageous. Using a personal loan prepayment calculator, you can determine the interest savings for both partial and full prepayments, helping you manage your debt more effectively.
Optimal Timing
Prepaying your personal loan reduces the interest charged on the principal amount. The initial years of the loan tenure usually incur higher interest costs, making early prepayment beneficial. Delaying prepayment reduces the potential benefits since the interest outflow is already front-loaded.
Prepayment Charges
Financial institutions often charge a fee for prepaying a loan, usually around 2% of the prepayment amount. These charges are meant to compensate for the interest income the lender loses due to early repayment. It’s important to factor in these costs when considering prepayment.