Personal loan prepayment
Personal Loan Prepayment Calculator.
Personal loans carry the highest rates of any common retail loan — see exactly how much interest prepaying early can save you, even before checking your lender's foreclosure terms.
- Principal amount
- ₹5,00,000
- Total interest
- ₹1,43,872
- Total amount
- ₹6,43,872
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | ₹1,01,898 | ₹59,070 | ₹3,98,102 |
| 2 | ₹1,15,962 | ₹45,006 | ₹2,82,139 |
| 3 | ₹1,31,970 | ₹28,998 | ₹1,50,170 |
| 4 | ₹1,50,169 | ₹10,784 | ₹0 |
Why prepaying a personal loan pays off fastest
At 10-24%+ interest, a personal loan is usually the most expensive debt you're carrying — which means it's also where prepayment delivers the highest guaranteed return on your spare cash, ahead of a home or car loan at a much lower rate. Just check your lender's lock-in period and foreclosure charge first, since RBI's zero-penalty rule for individuals only covers floating-rate loans, and many personal loans are fixed-rate.
Frequently asked questions
Should I prepay my personal loan as soon as I have spare cash?
Usually yes, and more urgently than a home loan — personal loans carry the highest rates of any common retail loan (often 10-24%+), so every rupee prepaid saves more interest than it would on a cheaper, secured loan like a home loan. If you're deciding between prepaying a personal loan and a home loan, the personal loan almost always wins.
Does my personal loan have a prepayment penalty?
It depends on your lender and whether the loan is fixed or floating rate. Unlike home loans, RBI's ban on prepayment penalties for individual borrowers applies specifically to floating-rate loans — many personal loans carry fixed rates, and lenders can and often do charge a foreclosure fee, typically 2-5% of the outstanding principal. Check your loan agreement before assuming it's free.
Is there a lock-in period before I can prepay a personal loan?
Many lenders impose a lock-in of 6-12 months from disbursal before allowing any prepayment or foreclosure — this varies significantly by lender, so check your specific sanction letter rather than assuming you can prepay from month one.
How much can prepaying a personal loan early actually save me?
Because personal loan tenures are short (typically 1-5 years) but rates are high, prepaying even a small amount in the first year can meaningfully cut total interest — the effect is smaller in absolute rupees than on a large home loan, but often larger as a percentage of what you'd otherwise pay, precisely because the rate is so much higher.