Understanding these terms keeps every prepayment scenario accurate and comparable.
Outstanding principal
This is the current balance you owe. For example, if your original ₹2,500,000 loan has reduced to ₹1,800,000, the calculator uses ₹1,800,000 for future projections. Tracking the right number ensures interest savings are realistic.
Equated Monthly Instalment (EMI)
EMI combines principal and interest into a fixed payment. Enter the latest EMI so the tool compares baseline vs. accelerated schedules correctly. It is the heartbeat of your loan repayment.
Reducing balance method
Most Indian loans use reducing balance interest where each payment lowers future interest. The calculator mirrors this structure, ensuring month-by-month projections stay reliable.
Monthly surplus
Any extra amount you add to EMIs each month. For instance, directing ₹3,000 from a salary increment toward the loan speeds up principal reduction and amplifies savings over time.
Lump-sum prepayment
A one-time deposit such as a bonus or maturity payout. A ₹100,000 lump sum can shave several months off the schedule depending on rate and tenure. It is a powerful tool for debt destruction.
Prepayment penalty
The fee some lenders charge for early repayment, often 1-2% of the amount prepaid. Adding this ensures you view net savings instead of inflated figures. Always read the fine print.
Payoff date
The month when your balance reaches zero. Comparing the original payoff date against the accelerated version clarifies whether extra payments meet your target timeline.
Interest saved
The difference between original total interest and new total interest after prepayments. It quantifies the tangible benefit of your strategy in hard currency.
Effective interest rate
The actual annual cost after factoring compounding or rate resets. Updating this field during floating-rate cycles keeps forecasts aligned with lender notices.
Balance transfer
Shifting the loan to a new lender or product at a lower rate. Testing this scenario shows whether transfer fees are justified by the additional interest saved.