When a lump sum lets you repay part of an equal-instalment loan early, the rest can be reworked in two ways: keep the monthly payment and shorten the term (A), or keep the term and lower the payment (B). On a ₩200 million balance at 4.32% a year with 300 months (25 years) left, the payment is ₩1,091,330 and the remaining interest is ₩127,399,102. Prepay ₩50 million and A cuts the term to 191 months, 109 months shorter, saving ₩70,032,093 (about ₩70.03 million) of interest. B lowers the payment to ₩818,498, ₩272,832 less, and saves ₩31,849,776 (about ₩31.85 million). Same ₩50 million, a ₩38,182,317 gap in interest. The calculator below shows both paths side by side. This is our arithmetic, not a formula set in law.
1. Keeping the payment and shortening the term (A) saves more interest — ₩70.03M vs ₩31.85M on ₩50M of ₩200M (ours).
2. Keeping the term and lowering the payment (B) eases each month — ₩1,091,330 → ₩818,498.
3. Prepayment fees are separate — the calculator doesn’t subtract them.
Calculator
Updates as you type. Equal-instalment loans only; monthly interest = balance × annual rate ÷ 12 (our arithmetic). Prepayment fees, daily interest and floating rates are not included; how your bank recalculates after a prepayment depends on your contract.
The two paths — our arithmetic
| Item | How it’s worked out | Worth noting (ours) |
|---|---|---|
| Current payment | M = balance × r × (1+r)n ÷ ((1+r)n − 1), r = annual rate ÷ 12 ÷ 100, n = months left | ₩1,091,330 on ₩200M, 4.32%, 300 months |
| A. Shorter term | Repay the smaller balance at the same M month by month until it reaches zero; the last month pays what’s left | 191 months with ₩50M, last payment ₩14,244 |
| B. Lower payment | Spread the smaller balance over the same n months for a new M | ₩818,498 with ₩50M |
| Interest saved | Remaining interest with no prepayment − remaining interest on each path | A ₩70,032,093 · B ₩31,849,776 |
The equal-instalment formula is the same as in our loan repayment calculator. A saves more for a simple reason: paying the same amount sends more of each payment to principal, the balance falls faster, and so does the interest on it. Under B, less goes to principal each month and interest keeps running for the full term (our note).
Three worked cases — ₩200M, 4.32%, 300 months left
| Prepayment (our example) | A. Same ₩1,091,330 | B. Same 300 months |
|---|---|---|
| ₩10 million | 275 months (25 fewer) · ₩18,101,052 saved | ₩1,036,764 a month · ₩6,369,955 saved |
| ₩30 million | 229 months (71 fewer) · ₩47,532,025 saved | ₩927,631 a month · ₩19,109,865 saved |
| ₩50 million | 191 months (109 fewer) · ₩70,032,093 saved | ₩818,498 a month · ₩31,849,776 saved |
At every amount A saves more than twice as much interest as B. That doesn’t make A always better: under A you keep paying ₩1,091,330 a month, while B frees ₩272,832 a month for an emergency fund or a dearer debt. Comparing repayment with putting the money in a deposit is in loan payoff vs savings.
Which path — our summary
| If | What to do | Worth noting (ours) |
|---|---|---|
| You want the least interest | Work out A (shorter term) | Monthly outgoings unchanged |
| Money is tight each month | B (lower payment) | Saves under half of what A does |
| Before you prepay | Check the fee is smaller than the interest saved | Fees: our prepayment penalty calculator |
| Your bank offers only one | Ask how it recalculates, per your contract | We didn’t check banks’ methods |
Checklist
- ☐ Balance, rate and months left (repayment statement)
- ☐ Prepayment fee and when it stops applying
- ☐ Whether the bank shortens the term or lowers the payment
- ☐ Emergency money left after paying
- ☐ With a floating rate, the next reset date
Questions that remain
Why is A’s last payment ₩14,244?
Paying the same amount each month, the last month only needs to cover what principal and interest are left: ₩14,244 in month 191 (our arithmetic, rounded to the won).
What about equal-principal loans?
The calculator covers equal instalment only. How the principal slice is reset after a prepayment on equal-principal loans varies by contract, so we left it out.
Prepaying during a grace period?
During grace no principal is repaid and interest runs on the whole loan, so prepaying cuts that interest at once. Grace interest is worked out in our grace period loan calculator.
Sources
- Our arithmetic. The equal-instalment formula is ours, not set in law, and matches our loan repayment calculator (checked 4 November 2026). A (shorter term) is counted month by month at the same payment until the balance is zero; B (lower payment) spreads the smaller balance over the same months. Every figure in the tables was matched between a Python reference and the calculator.
- Not read. Banks’ loan terms and how they recalculate after part-prepayment, prepayment fee terms (the consumer-protection side is in prepayment fees), and part-prepayment on equal-principal or bullet loans.
- What we added. The “worth noting” column and the example terms (₩200M, 4.32%, 300 months).
Where to check further
- Your repayment statement — balance and instalments left.
- Your bank — shorter term or lower payment after prepaying, and fees.
Written on 4 November 2026. The content is from the source; the glosses are ours.
