Prepay vs Invest

Should you prepay your loan, or keep investing?

You’ve got some spare money each month. Paying off the loan feels safe, but investing feels smart. Use this calculator to see how both paths work for you and find out which decision is better, after tax.

Your loan

₹
%
months
₹
Your current EMI: ₹0

Your investment assumptions

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Expected return 12%
Tax on gains 12.5%
Post-tax return: 0% vs loan rate 0%
Your result
The verdict

Enter your loan to begin

Fill in the details above.

If you prepay the loan
₹0
wealth at the finish line
If you keep investing
₹0
wealth at the finish line
How this decides. Prepaying a loan earns you a guaranteed, tax-free return equal to the loan’s interest rate. Investing earns an uncertain return, taxed on the gains. When your post-tax expected return is lower than the loan rate, clearing the debt wins. When it’s clearly higher, investing wins. Both paths here spend the exact same money each month, so the comparison is fair.
More on this

Should I prepay my loan, or does the math actually favour investing?

Most articles answering "should I prepay my loan" hand you a rule of thumb: pay off debt first, or debt is leverage, invest instead. Neither is universally true. It depends entirely on one comparison: your loan's interest rate against what you'd genuinely earn, after tax, if you invested that money instead. A loan at 10.9% is costing you a guaranteed 10.9% for as long as it runs — tax-free, since there's no tax on interest you never paid. Investing instead only wins if your post-tax return beats that rate consistently, not just in one good year. That's the real question hiding inside "should I prepay my loan," and the honest answer changes person to person depending on your rate, your tenure, and what you'd actually earn after tax.

Is there a middle path between prepaying and investing?

Yes, and it's worth knowing before you commit to either extreme. Keep investing your surplus every month while the loan runs. The day your invested corpus grows large enough to equal what you still owe, cash out and clear the loan in one shot. You get market growth and a debt-free finish, instead of locking into one path for the entire tenure. It isn't always the mathematically optimal choice on paper — that still depends on your numbers — but it hedges against picking the wrong pure path halfway through a multi-year loan. The two pure paths this calculator models show you the boundaries; the hybrid sits somewhere between them.

This is an estimate, not investment advice. Investment returns are not guaranteed and vary year to year; the figure you set is an assumption, not a promise. Tax treatment depends on the asset and current law. This tool ignores prepayment charges (usually nil on floating-rate loans), the emotional value of being debt-free, and your emergency fund, which should always come first. For a decision this size, sanity-check it against your own situation, and a fee-only planner if you can.