Loan Prepayment vs Investment Calculator

Loan vs Invest Calculator: Decide What’s Best for Your Money

Have some extra money from a bonus, salary hike, or side income? You’re not alone in wondering:
“Should I repay my loan or invest the extra money?”
This decision can significantly impact your financial growth and peace of mind.

To simplify this, we’ve built a simple Loan vs Invest Calculator that helps you decide based on real numbers, not just guesswork.

🔢 What Does This Calculator Do?

The calculator compares two outcomes:

• 🏦 Loan Prepayment: How much interest will you save if you repay your loan early?
• 📈 Investment: How much return can you earn by investing the same amount?

You’ll get a clear suggestion — whether to invest or prepay — based on your input.

🧮 How the Calculation Works

Let’s take an example:

• Extra Money: ₹1,00,000
• Outstanding Loan: ₹5,00,000
• Loan Interest Rate: 11%
• Remaining Tenure: 5 years
• Investment Return (e.g., Mutual Fund SIP): 12%

👉 In this case:

• Interest Saved by Prepaying: ₹55,000
• Investment Gain: ₹76,234
  ✅ So the calculator suggests: Better to invest.

👥 Who Should Use This Calculator?

1️⃣ People with a Lump Sum Amount

Got a bonus or sold an asset? Use the Lump Sum option in the calculator to decide whether to invest or repay your loan partially.

2️⃣ People with Monthly Surplus

Got a salary hike or want to start SIPs? Use the Monthly Extra Payment option to compare EMI prepayment vs monthly investment.

🧠 When Prepaying a Loan is a better option

Our calculator doesn’t just give numbers. It guides real-life scenarios too.
Here are cases where loan prepayment is usually better:

• Irregular income (freelancers, business owners)
• Fear of loan burden
• No emergency fund yet
• Multiple loans or credit card debt
• Personal peace of mind > returns

💰 When Investing Extra Money is a better option

If you tick these boxes, investing could give you better long-term results:

• Stable income (Govt job or MNC)
• Emergency fund already built
• Confident in handling EMIs till the end
• Comfortable with market risk
• Knowledge of mutual funds/stocks
• Thinks in % rather than ₹₹

🔎 How to Use the Loan vs Invest Calculator

Just fill out a few fields:

• Outstanding Loan Amount
• Loan Interest Rate
• Remaining Tenure
• Extra Money (Lump Sum or Monthly)
• Expected Return on Investment (%)

And you will see,

• Interest saved (if prepaid)
• Potential returns (if invested)
• Final suggestion (which is better)

There’s no “one-size-fits-all” answer. But now you have a smart tool to make an informed, confident financial decision. Use it whenever you get a bonus, raise, or windfall — and take control of your money like a professional.

If you want to know more about Investing and Paying Debt with your extra money, we recommend to read our post on this topic

You can also Read our article on How to Reduce Home Loan tenure From 20 years to 10 years by following 7 rules strictly in first 4 years.