Loan Prepayment vs SIP Investment — Which Saves More?
Compare prepaying a loan vs investing in a SIP with the same amount. See which option builds more wealth.
Read the complete guideBetter Option
Invest in SIP
by ₹9,06,279 (78.8%) over 10 years
| Metric | Prepay Loan | Invest in SIP |
|---|---|---|
| Amount Used | ₹5,00,000 | ₹5,00,000 |
| Benefit | ₹2,43,914 saved | ₹11,50,193 earned |
| Net Outcome | ₹7,43,914 | ₹16,50,193 |
Assumption: Lump sum invested at 12% p.a. compounded monthly for 120 months. Prepayment reduces principal immediately. No tax implications modelled.
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How to Use Loan vs SIP Calculator
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Enter lump sum
The amount you have available to prepay or invest.
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Enter loan details
Outstanding amount, interest rate, remaining tenure.
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Enter SIP return
Expected annual return from equity mutual funds (12-15% typical).
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Compare
See interest saved vs wealth gained and the verdict.
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Frequently Asked Questions
Should I prepay my home loan or invest in SIP?
The math is simple: if your loan interest rate is higher than your expected investment return (post-tax), prepay the loan. For most people, home loans at 8-9% should be prepaid before investing, unless you are in the 30% tax bracket and claiming Section 24(b) deduction on interest.
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