Invest the surplus, or kill the loan?
Plug in your loan and your monthly surplus - we'll project wealth from both paths and recommend the smarter call.
Verdict
Loan prepayment wins by ₹56.38 L
Your loan rate (8.5%) is meaningfully higher than your expected SIP return (12%). Prepayment is the rational choice and it's risk-free.
Loan term used
Prepay closes in 12y 11m
SIP corpus
Difference
SIP path
Invest ₹10.0 K/mo for 20 years at 12% - corpus ₹37.12 L.
Prepay path
Prepay loan, save ₹21.79 L in interest, then invest released EMIs.
Why SIP can win
Your invested money compounds for the full 20 years - uninterrupted. Loan prepayment only saves the loan rate, which is usually lower than equity returns long-term.
Why prepay still feels good
A closed loan is emotional alpha - peace of mind, simpler balance sheet, and certainty you can't get from markets.
The hybrid most planners suggest
Split the surplus 70/30 - 70% into SIP, 30% into yearly prepayments. You get most of the compounding upside and still shave years off your loan.
We compare two paths for the same monthly surplus over your original loan tenure:
SIP path - invest the surplus monthly into equity at your expected return rate. The full tenure compounds.
Prepay path - use the surplus as monthly prepayment. The loan finishes early; from that point onwards, the released EMI plus the surplus is invested at the same return until your original tenure ends. Final wealth = interest saved on the loan + the post-payoff corpus.
Timeline clarity: Both paths are measured over your original loan tenure. The prepayment path closes the loan early (using your entered EMI), then invests the freed-up cash for the remaining months. The SIP path invests the entire period. This gives a fair apples-to-apples comparison to the same end date.
Caveat: SIP returns are projections, not promises. Prepayment savings are guaranteed. That risk asymmetry is why many people happily pick the slightly lower-EV but certain path.