How to Close Your Loan Faster
Enter your outstanding balance, rate and EMI, then try an extra monthly payment. See instantly how many months you cut and how much interest you save.
Example values shown — replace them with your own loan details. Estimates only, not financial advice. Rates are examples — actual rates vary by lender and profile, so verify with your lender.
Five ways to close a loan sooner
1. Pay a little extra every month. Even a small fixed amount added to each EMI goes straight to principal and shortens the loan.
2. Use lump sums. A bonus, tax refund or maturing deposit used as a part-prepayment can remove years of interest.
3. Keep your EMI when the rate falls. On a floating-rate loan, a rate cut usually stretches the tenure rather than lowering the EMI — keeping the old EMI reduces the tenure instead.
4. Refinance if a much lower rate is available. Compare the new rate against the transfer, processing and other fees before moving.
5. If you have several loans, focus extra money on the one with the highest interest rate first.
Why early prepayments save the most
Interest is charged on the outstanding balance, which is largest at the start. Money that reduces principal early stops that interest from compounding for the rest of the loan, so an extra payment in year two saves far more than the same payment in year fifteen.
Before you prepay
Check your agreement for foreclosure or prepayment charges. As a general rule, RBI norms restrict prepayment penalties on floating-rate loans to individual borrowers, while fixed-rate loans may carry charges — but terms differ, so confirm with your lender. Keep an emergency fund aside so that prepaying does not leave you short of cash.
Frequently asked questions
Should I prepay my loan or invest the money?
It depends on your loan rate, the after-tax return you can realistically expect, your comfort with risk and your need for liquidity. This calculator shows only the loan side — what an extra payment saves. It is not financial advice; compare options that suit your own situation.
Is it better to reduce the EMI or the tenure after prepaying?
Keeping the EMI unchanged and shortening the tenure generally saves more interest. Lowering the EMI eases your monthly cash flow instead. Choose based on your priority.
How much does an extra payment really save?
It depends on your balance, rate and how early you start. Change the extra-payment amount above and watch the months saved and interest saved update.
Will closing a loan early affect my credit score?
Paying off a loan on time or early is generally viewed positively. Closing an account can slightly change your credit mix, but the effect is usually minor compared with missed payments.
Track every loan in one place
KadanMukti shows the true cost of all your loans, your debt-free date, and what an extra payment saves. Free to try, no signup.
Try the free demo →More free calculators
Also available in
Estimates only, not financial advice. Rates are examples — actual rates vary by lender and profile, so verify with your lender. Calculator app, not a financial advisor.