Rajkumar Anguluri·Software Engineer · Founder, Artha Engine·Last reviewed 8 April 2026·Methodology
Independent decision-support tool. Artha Engine is not a financial services provider, does not sell loans or insurance, and has no commission relationships with banks or insurers.
Prepay vs Invest Calculator
Should your next ₹1 lakh kill loan interest or grow in an index fund? See the net benefit over your loan's remaining life.
Inputs
Compare certainty from loan savings against projected investment upside.
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Projected investment corpus
₹21.6L
Invest
Expected return is high enough to justify keeping the capital invested.
Only stay invested if you can ride out market volatility without panic-selling.
Current EMI
₹46,547
Interest saved by prepay
₹3.7L
Investment corpus
₹21.6L
Tenure shaved
32 mo
Net invest advantage
₹17.9L
Investment value over remaining tenure
Projected corpus if the lump sum stays invested.
Payoff timeline shift
How much sooner the loan finishes if you prepay the lump sum today.
Benchmarks
If returns were 3% lower
+62.4%You
₹17.9L
Benchmark
₹11L
Stress-test the investing case against a softer market.
Double the lump sum
-50.0%You
₹17.9L
Benchmark
₹35.7L
Marginal benefit of a bigger corpus to deploy.
Half the lump sum
+100.0%You
₹17.9L
Benchmark
₹8.9L
Marginal cost if you deploy less capital.
What moves the result most
Holding everything else fixed, here is how the headline shifts when each input swings by a typical range.
Investing wins on paper by a meaningful margin
Your expected return is at least 2 percentage points above the loan rate, so the projected corpus comfortably exceeds the interest saved.
Projected upside
₹17.9L
Prepayment shaves at least a year off the loan
Even when investing looks better on paper, a shorter loan delivers flexibility and certainty.
Tenure reduction
32 mo
Next best actions
The result hints at what to look at next. Each link carries your current numbers so you never re-enter them.
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At a glance
- What it does
- Compares the guaranteed interest saved by loan prepayment against the projected return from investing the same lump sum.
- Decision rule
- Prepay if expected return is within 1-2% of loan rate; invest if expected return exceeds loan rate by 2%+ AND you can ride equity volatility.
- Typical output
- ₹5L lump sum on a 9% home loan vs 12% equity SIP over 14 years: investing wins by ~₹4-5L, but loan savings are guaranteed.
- Best used for
- Deciding what to do with a bonus, severance, or inheritance when you're carrying a home loan.
How It Works
This is the drill-down layer. The flagship flow leads with a recommendation, and this page lets you inspect the underlying model.
- Prepay path compares loan interest saved and months shaved off the loan.
- Invest path compounds the same lump sum at your expected annual return over the remaining tenure.
- Net advantage = future investment value - interest saved from prepayment.
Assumptions
The recommendation stays blunt, but the assumptions remain visible.
- The comparison treats expected investment return as uncertain and loan-rate savings as guaranteed.
- Taxes on capital gains and behavioural risk are not explicitly modelled.
- The loan EMI is assumed to stay unchanged after partial prepayment.
FAQ
The follow-up questions people usually ask after the main recommendation is already clear.
When does prepayment usually win?
Prepayment tends to win when your loan rate is close to or above the return you realistically expect from investments, or when you value certainty over upside.
When can investing beat prepayment?
If the return gap is meaningfully positive and you can stay invested for years without panic-selling, investing may create more wealth.
Sources & references
Every formula and assumption above is grounded in these authoritative sources.
Related tools & decisions
Keep going from here — each link carries the same cluster context.
What to do next
Related guides
Long-form explainers that put the math behind this tool in context.
Calculations and decision frameworks, not personalised financial advice. The numbers on this page are based on the inputs you supplied and the regulatory rules in effect when this page was last reviewed. They are not a recommendation to buy, sell, hold, port, or surrender any specific financial product. Consult a SEBI-registered investment advisor, a qualified tax professional, or a licensed insurance broker before acting on a financial decision involving your money.
Artha Engine is an educational decision-support website. We do not offer loans, sell insurance, distribute mutual funds, provide regulated investment advice, collect loan applications, or receive commissions from banks, insurers, AMCs, brokers, or other financial providers. References to RBI, SEBI, IRDAI, Income Tax Department, or other authorities are source citations only. Artha Engine is not affiliated with, endorsed by, or sponsored by any government authority, regulator, bank, insurer, AMC, or broker. Artha Engine does not charge users fees for using calculators, comparison tools, articles, or financial health scoring. Mailing address: India.
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