Prepayment / Part-Payment

A prepayment, also called a part-payment, is any extra money you pay directly against your loan’s principal, over and above your regular EMIs. Because it lands straight on the outstanding balance rather than going through the usual interest-then-principal split, it shrinks what you owe immediately and reduces the interest that would have built up on that amount.

When you make a part-payment, you usually choose between two outcomes. Keep the EMI the same and the lender shortens your tenure — this saves the most interest, because you exit the loan sooner. Alternatively, keep the tenure and the EMI drops, easing your monthly outgo. Both reshape your amortization schedule, but the tenure-reduction route is the more powerful one for cutting total interest.

A full prepayment that closes the loan entirely is foreclosure; a part-payment simply chips the balance down while the loan continues. Either way, check your lender’s terms — some loans carry conditions or fees on prepayment, so confirm with your lender before you plan one. The how prepayment reduces EMI guide explains the timing that matters most.

Worked example. On a ₹30,00,000 home loan at 8.5% over 20 years, a one-time ₹3,00,000 part-payment made after about a year — keeping the EMI and cutting the tenure — saves roughly ₹9,54,697 in interest. Try different amounts and timings in the EMI calculator. This figure is an estimate for illustration only.