Prepay Loan or Invest Calculator
Prepaying a loan returns exactly the loan's interest rate, guaranteed, and the saving is never taxed. Investing might return more, but that return is uncertain and the gains are taxed. This calculator puts both sides after tax, which is the comparison that makes the decision straightforward.
Prepaying also ends the loan 3 years 8 months early. The two columns are not equally certain — one is fixed in your loan agreement, the other is an assumption you chose.
Worth knowing
Which one actually wins here?
Investing, on these numbers — ₹29,85,518 of after-tax gains against ₹11,48,164 of interest saved. But that gap is an expectation, not a promise, and the prepayment saving is guaranteed.
Why compare after tax at all?
Interest you never pay is not income, so it is never taxed — prepaying returns the full 8.5%. Investment gains are taxed, so a headline 12% is worth less than 12% to you. Comparing the two headline rates directly is the mistake that makes this decision look obvious in the wrong direction.
What is this comparison not telling me?
That the two outcomes carry different risk. One is arithmetic on a rate already fixed in your loan agreement; the other depends on a return nobody can promise. Equal expected rupees do not make them equal choices.
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Tax rules applied as of 2026-Q2, last verified against official sources on 2026-08-23. This calculator does arithmetic on the figures you enter — it is not investment advice, not a recommendation, and not a forecast. All calculators