Yes, you can save Rs. 12 lakhs on a loan of Rs. 50 lakhs by saving Rs. 100 every day. By prepaying your loan every year, not only do you reduce the loan tenure but also reduce the interest payment on the principal.

Preparing your loan is especially useful in the initial years when the principal and the interest component, both are high.

Prepaying just 5% of your loan every year can reduce your loan repayment tenure from 20 to 12 years.


Daily Saving = Rs. 100

Annual Saving = 100 * 365 = Rs. 36,500

Interest rate (Assumption) – 9.5%

Loan tenure – 20 years

Loan amount – Rs. 50 lakhs

By prepaying this amount every year, you can reduce the principal amount every year, hence saving on interest costs too.

Another way to reduce your interest cost is to increase the EMI by 5% every year. This way, your monthly loan repayment would increase, reducing the overall interest cost. As the tenure of the loan increases, the savings will also be more.