Prepay your loan or invest the surplus?

Got spare cash and a bank loan? Enter your figures and see which use of the money leaves you wealthier, after Nepal tax. Prepay, invest, clear the OD, refinance: all 15 options, ranked.

Your figures stay in your browser unless you send them to us for review.

Loan prepayment calculator

Enter up to three loans and your surplus; hover over or click into any field for guidance. Every option is valued as extra wealth at the end of the same horizon, after tax, with all freed cash reinvested at your after-tax return.

Loan A (Primary)The loan the prepayment options apply to.

Outstanding balance Rs

Principal still owed on your main loan today, from the latest loan statement. This is the loan the prepayment options apply to.

Interest rate % p.a.

Current annual interest rate on Loan A (base rate plus premium). If it resets soon, also try the rate you expect after the reset.

Remaining term months

Number of EMIs still to be paid on Loan A, in months. For example, 5 years left = 60.

Prepayment fee % of amount

Fee the lender charges on any amount you prepay, as % of the amount prepaid. Check your offer letter; enter 0 if no fee applies.

Surplus

Total surplus available Rs

Total spare cash you could use now, after keeping what the business or household needs for day-to-day running.

Prepayment in partial options Rs(for Options 3 and 5 only)

Amount the partial options (3 and 5) put into Loan A. The rest of the surplus is invested. Must not exceed the total surplus.

Minimum cash I must keep Rs(also the reserve held back in Option 7)

Cash you must still have in hand after the decision, as an emergency or working-capital buffer. Option 7 holds back exactly this amount at the deposit rate and prepays the rest into Loan A. The "Best keeping … in cash" card shows the best option that leaves at least this much. Enter 0 if you need no buffer.

Investment and tax

Expected investment return % p.a., pre-tax

Yearly return you expect before tax if the surplus is invested, e.g. an FD rate or a realistic portfolio return. Higher-return choices carry more risk.

Borrower type

Business: loan interest is a tax-deductible expense, so saving interest also loses that tax saving. Individual: personal or home loan with no interest deduction.

Business tax rate % (interest deduction)

Your effective income tax rate on business income (e.g. 25% for most companies). Used only when the borrower type is Business.

Tax on investment income %

Tax you pay on the investment income. Business: usually the same as the business tax rate. Individual: the withholding rate on the chosen investment. Confirm it under the current Finance Act.

Loan B (Other)Optional. Leave the balance at 0 if you have no second loan.

Outstanding balance Rs

Principal still owed on this loan today.

Interest rate % p.a.

Current annual interest rate charged on this loan.

Remaining term months

Number of EMIs still to be paid.

Prepayment fee % of amount

Fee the lender charges on any amount you prepay on this loan. Enter 0 if none.

Loan C (Other)Optional. Leave the balance at 0 if you have no third loan.

Outstanding balance Rs

Principal still owed on this loan today.

Interest rate % p.a.

Current annual interest rate charged on this loan.

Remaining term months

Number of EMIs still to be paid.

Prepayment fee % of amount

Fee the lender charges on any amount you prepay on this loan. Enter 0 if none.

Overdraft (OD) accountOptional. Leave the drawn balance at 0 if you have no OD.

Sanctioned OD limit Rs(for Options 6, 6b and 8)

Total overdraft limit in your sanction letter. Used to work out the commitment fee on the part you do not use.

Average drawn balance Rs(for Options 6, 6b and 8)

Average amount actually used in the OD over a normal month or year, not just today's figure. Only this much of the surplus can save OD interest; anything above it earns nothing in the OD.

OD interest rate % p.a.(for Options 6, 6b and 8)

Annual interest rate the bank charges on the drawn OD balance.

Commitment fee on unused limit % p.a.(for Options 6, 6b and 8)

Yearly fee some banks charge on the unused part of the limit. Paying down the OD increases the unused part, so this fee eats into the saving. Enter 0 if your bank does not charge it.

Additional informationLeave a rate at 0 to skip that option.

Deposit rate on minimum cash % p.a.(for Option 7 only)

Pre-tax interest the minimum cash earns while it is held back in Option 7, e.g. your savings or call deposit rate.

Refinance rate on offer % p.a.(for Options 9a and 9b only)

Rate another bank (or your own bank on renegotiation) offers to take over Loan A. Leave 0 to skip options 9a and 9b.

Switching cost Rs(for Options 9a and 9b only)

Total one-time cost of moving Loan A, in rupees: the old bank's prepayment or swap fee, the new bank's service fee, valuation and legal costs.

Delayed prepayment month month no.(for Option 10 only)

Month in which option 10 prepays Loan A from the invested surplus, e.g. 12 for one year from now, or the month of the next rate reset.

Target EMI for hybrid Rs, 0 = midpoint(for Option 11 only)

EMI you want after putting the whole surplus into Loan A (option 11). It must sit between the reduced EMI (option 1) and today's EMI. Enter 0 to use the midpoint.

Business project return % p.a., pre-tax(for Option 12 only)

Expected yearly pre-tax return if the surplus goes into your own business (machinery, stock, supplier discounts). Use a cautious, risk-adjusted figure. Leave 0 to skip option 12.

FD rate % p.a.(for Option 13 only)

Interest rate on a fixed deposit if the surplus is placed in an FD (option 13). Leave 0 to skip.

Loan-against-FD spread % over FD(for Option 13 only)

Extra interest the bank charges on a loan against your FD, over the FD rate. Usually 1 to 3 percentage points.

Loan-against-FD limit % of FD(for Option 13 only)

Most the bank will lend against the FD, as % of the FD amount. Often up to 90%.

All options, ranked

#	Option	Net gain (Rs, end of horizon)	Bar	Cash kept	Risk

What the risk labels mean

None: The surplus goes into paying down debt or a deposit, so the gain does not depend on market returns. It assumes your loan rates stay as entered.
Market: The surplus is invested, so the gain depends on actually earning the return you entered. It could be lower, or negative.
Partly market: Part of the surplus is invested; that part depends on market returns.
Market until prepaid: The surplus is invested until the prepayment month, so it is exposed to market returns until then. A shortfall leaves less to prepay.
Business: The surplus goes into your own business; the gain depends on achieving the project return you entered.

Illustrative only. Results depend on the figures you enter and the assumptions shown. This is not tax or investment advice; confirm rates and rules for your situation before acting.

Want these numbers run on your actual loan papers?

Talk to us

Prepay your loan or invest the surplus?

Loan prepayment calculator

Have a CA review my numbers

All options, ranked

What the risk labels mean

Want these numbers run on your actual loan papers?