How to Use This Calculator
Follow these simple steps to find out your potential savings:
- Enter Loan Principal: Input your current total outstanding loan amount in BDT.
- Enter Existing EMI: Provide your current Equated Monthly Installment (the fixed amount you pay each month).
- Enter Interest Rate: Input the annual interest rate for your loan.
- Enter Prepayment Amount: Type in the lump sum amount you plan to pay now.
- Calculate Savings: Click the button to instantly see how much interest you'll save and how much sooner you'll be debt-free.
How Loan Prepayment in Bangladesh Can Save You Money
Loan prepayment, also known as early settlement or foreclosure, is the process of paying off your loan—or a part of it—before the official due date. Making a lump sum payment towards your outstanding principal can significantly reduce the total interest you pay over the loan's lifetime. Many leading banks in Bangladesh, including City Bank, BRAC Bank, and Eastern Bank Ltd (EBL), offer this facility to their customers.
Why Use an Independent Prepayment Calculator?
While banks provide the option to prepay, their own calculators can be hard to find or complex. An independent tool empowers you to:
- Quantify Your Savings: See the exact amount of interest you will save in Bangladeshi Taka (BDT).
- Understand Tenure Reduction: Know precisely how many months or years you can shave off your loan term.
- Make Informed Decisions: Experiment with different prepayment amounts to find the best strategy for your budget before you approach the bank.
Frequently Asked Questions (FAQ)
1. Are there any fees for loan prepayment in Bangladesh?
This depends on the bank and the type of loan. Some banks may charge a prepayment penalty, which is typically a small percentage (e.g., 1-2%) of the outstanding amount. However, for certain loan types, the Bangladesh Bank has guidelines that may restrict such fees. It's crucial to check your loan agreement or ask your bank directly about any applicable charges.
2. What is the difference between part-prepayment and foreclosure?
Part-prepayment is when you pay a lump sum that is less than the total outstanding principal. This reduces your principal, and you can either choose to lower your EMI or reduce your loan tenure. Foreclosure (or full prepayment) is when you pay off the entire outstanding balance at once, effectively closing the loan account.
3. Should I reduce my EMI or loan tenure after prepayment?
This is a key decision. While banks may offer both options, reducing the loan tenure results in the maximum possible interest savings. Opting to lower your EMI can increase your monthly cash flow but saves you significantly less in total interest over the long run. This calculator is designed to show the powerful benefits of tenure reduction.
Disclaimer
This is an informational tool and provides estimates based on the data you provide. Actual savings may vary based on your bank's specific calculation methods and any applicable prepayment fees. This tool is not affiliated with, endorsed, or sponsored by any financial institution in Bangladesh.
Furthermore, this calculator is for informational purposes only. We do not encourage users to accept interest, as it is considered 'haram' (forbidden) in Islam. The Prophet Muhammad (ﷺ) cursed those who deal with interest (riba). As narrated by Jabir (may Allah be pleased with him), "The Messenger of Allah (ﷺ) cursed the one who consumes riba, the one who gives it to others, the one who records it, and the two who witness it." (Sahih Muslim 1598). For more details, you can refer to the Hadith at Sunnah.com.