Loan Repayment Vs Investment Optimizer

Q: What does this optimizer actually compare?

It compares Option A (interest saved + freed cashflow value if enabled) versus Option B (post-tax investment value), over the same remaining loan horizon, including split allocations.

Q: Why do I sometimes see “No freed EMI / cashflow within horizon”?

Freed EMI/cashflow appears only if the loan ends early within the selected horizon (reduce tenure / extra EMI). If the loan still runs throughout the horizon, there is no fully freed EMI to invest.

Q: Why do I sometimes see “No EMI saving” in Reduce EMI mode?

Reduce EMI recomputes EMI after prepayment for the same tenure. If EMI does not reduce meaningfully (or savings becomes ~0), there is no additional monthly cashflow to invest.

Q: What does Invest freed EMI / savings mean?

If tenure reduces, full EMI becomes free earlier; if EMI reduces, monthly savings appear. When enabled, freed cashflow is assumed to be invested until the end of the remaining horizon.

Q: Assumptions used in this calculator

Loan rate constant; no foreclosure charges; post-tax return is a steady assumption; invested money is not withdrawn mid-way.

Q: Methodology (how calculations work)

Loan benefit is interest saved (base minus after) plus FV of freed cashflow (if applicable). Investment uses annual compounding for lumpsum and annuity-due for SIP.

Loan vs Invest Optimizer

Analyze whether extra cash should go towards loan prepayment or investments — and what to do when your monthly surplus increases.

Loan Details

Outstanding Loan Amount (₹) Current EMI (₹ / month) Interest Rate (% p.a.) Remaining Tenure (years)

Lumpsum Scenario

Additional Lumpsum Available (₹) Prepayment Effect Monthly Income Increase / Surplus (₹)

Investment Assumptions

Expected Post-tax Return (% p.a.) Use your realistic post-tax estimate (equity/debt differs).

Optional: Split Allocation

Allocate to Loan vs Investment 50% loan • 50% invest

0% loan100% loan

For “all-in” decisions, slide fully left or right.

Advanced

Invest freed EMI / savings If your loan ends early (Reduce Tenure) or EMI reduces (Reduce EMI), this assumes you invest that freed cash flow until the end of the original horizon.

Behaviour Preference

Peace-of-mind vs Growth Balanced

Peace-of-mindGrowth

Results

Compare your wealth impact by the end of the loan horizon.

Loan Horizon —

Option A: Loan Benefit (interest saved + freed EMI value) —

↳ Interest saved (guaranteed) —

↳ Value of freed cashflow invested (post-tax) —

Option B: Investment Value (post-tax) —

Freed cashflow invested —

Suggested Split —

This tool is for planning only. Markets carry risk; loan prepayment is a guaranteed “return” equal to your effective loan interest.

FAQs — Loan Prepayment vs Investing

What does this optimizer actually compare?

It compares two outcomes over the same remaining loan horizon:

Option A: Interest saved by prepaying (a risk-free benefit roughly equal to your loan rate) + value of freed cashflow invested (if enabled).
Option B: Post-tax investment value if you invest the cash instead.

It also supports splits (part loan, part invest) so users get a realistic decision range.

Why do I sometimes see “No freed EMI / cashflow within horizon”?

Freed EMI/cashflow appears only when there is actually cash released within the selected remaining horizon:

Reduce Tenure: You get freed EMI only if the loan ends before the horizon ends.
Monthly surplus (extra EMI): You get freed EMI only if the extra EMI makes the loan finish early within the horizon.

If the loan still runs throughout the horizon, there is no fully freed EMI to invest during that period.

Why do I sometimes see “No EMI saving” in Reduce EMI mode?

In Reduce EMI, the calculator recomputes the new EMI for the same tenure after applying your prepayment. If the new EMI does not reduce meaningfully (or savings becomes ~0 due to rounding / constraints), the tool will show No EMI saving. That means there is no additional monthly cashflow created to invest.

What does “Invest freed EMI / savings” mean?

If tenure reduces (loan ends early), you’ll have the full EMI freed earlier. If EMI reduces (tenure unchanged), you’ll save a smaller amount each month. When this toggle is ON, the tool assumes that freed cashflow is invested until the end of the original remaining horizon.

Assumptions used in this calculator

Loan rate stays constant during the remaining tenure.
No processing fees / foreclosure charges included.
Post-tax return should reflect your realistic after-tax expectation.
Discipline assumption: invested money is not withdrawn mid-way.

Methodology (how calculations work)

Loan benefit: amortization interest saved (base − after) + FV of freed cashflow (if enabled and applicable).
Lumpsum investment: annual compounding for the horizon.
SIP investment: annuity-due model (SIP at start of month).

Want to see how part-payment affects your loan tenure or EMI — and which option works better for you?

Use our Loan Part-Payment Optimizer to compare reduce-tenure vs reduce-EMI scenarios and understand how interest savings and freed cashflow can impact your long-term wealth.

Try Loan Part-Payment Optimizer