Loan Prepayment Savings Tables

The same money is not worth the same thing

Prepaying a loan always saves interest. What almost nobody has a feel for is how much the amount saved varies — not by a little, but by more than twenty times, for the identical sum of money.

Three things move it. A dearer loan saves more, because the interest avoided is charged at a higher rate. A longer remaining tenure saves more, because the avoided interest would have gone on accruing for longer. And — the one people most reliably underestimate — paying earlier saves far more than paying later. On a twenty-year loan, ₹1 lakh in the first year is worth over seven times the same ₹1 lakh in year fifteen.

None of this is a reason to prepay or not to. It is the size of the prize, which is the thing you need before deciding anything.

Interest avoided per rupee prepaid

Read your rate down the side and the years remaining across the top. A figure of 4× means every ₹1 lakh prepaid avoids ₹4 lakh of interest over the life of the loan.

When you pay it matters more than you think

The same ₹1 lakh, on the same loan, paid at different points. Nothing about the money changes — only how long the balance it retires would otherwise have been charged interest on.

Paying a little more every month

The other way to prepay, and the one most people can actually do. A small amount added to every instalment compounds into a large amount of avoided interest, because each addition retires principal that would otherwise have been charged on for years.