Loans and EMI in Lipi: track the schedule, prepay, and move the payoff date

A loan feels fixed until a spare sum lands, whether that is a bonus, a sold asset, or a few months of careful saving, and then the question turns practical: what should that money do to the loan? In Lipi the answer starts with one loan entry, which gives you the full EMI schedule, and a Prepay preview that shows what a prepayment does before anything is saved. Pick Fewer EMIs or Smaller EMI, check the interest saved, save. The steps below come first, then an example worked both ways, so the choice is concrete rather than abstract.

What you need before you start

Four figures to start. The amount borrowed, the annual interest rate, the date of the first EMI, and the tenure in years, plus extra months if the term needs them. A paying account can wait: it is optional at setup, and it matters later because auto EMI needs one, and anything you book needs an account to book from. If the lender charges a prepayment penalty, have that rate or amount ready as well, since it belongs in the comparison.

Two gates to know up front. Bank loans in Lipi are a Premium feature, at Rs 1 or US$1 a month, and free users see a bank loan as a locked row. People ledgers, money owed between people, are free. The loan calculator is free for everyone and saves nothing, which makes it the right place to try figures before committing to them.

Add a loan and read the schedule

Open Loans and add a bank loan. The form asks for a name, the amount borrowed, the currency, the interest rate as a percentage a year, the first EMI date, and the tenure, with an interest type of Reducing or Flat; Reducing is the default, and the one most bank loans use. Bank or lender, loan account number, the name the loan is in, the account EMIs pay from, and notes sit under More details, and all of them are optional. Save, and Lipi builds the schedule: one row per month, each with a due date, an EMI, an interest part, a principal part, and the balance left after it.

The schedule follows one rule worth knowing. Each row's interest is worked out first, on the balance at the start of that row, and the principal part is the EMI minus that interest. So every row adds up to its EMI, and the last row absorbs whatever remainder is left. That is why the final EMI sometimes differs slightly from the rest.

Paying a row is a separate action. Open the row and choose Mark paid. The amount defaults to the row's EMI; set the date paid, add the voucher number, which is the reference from the bank's message or receipt, and a note if needed, and turn on Add to my books if the payment should also land as a transaction from one of your accounts. The loan's settings carry a Reminders toggle, covering the run-up to each EMI, a missed one, and the end of the loan, so reminders can be switched off for a loan that is paid another way.

Try it first in the free calculator

The calculator uses the same engine, chart, and schedule as a real loan, and it keeps nothing: leave the page and the figures are gone, which is what makes it safe for testing a loan and several prepayments without touching a real record. Its two prepayment choices are labelled Fewer EMIs and Smaller EMI. The one limit to carry with you is about timing. When you turn a calculator loan into a real loan, the terms carry over, and prepayments dated up to today carry over too, but prepayments dated after today were only a what-if and do not carry over. A prepayment sketched for next quarter has to be entered again when the money actually lands, so treat the calculator output as a plan, not a record.

Record a prepayment, step by step

Open the loan, then More actions and Prepay principal. Enter the amount and the date. Under After this, choose Fewer EMIs or Smaller EMI, the same labels as the calculator. Add a penalty percentage or amount if the lender charges one, and a voucher number. If the bank's letter states different figures, the preview offers Bank's EMI and Bank's EMIs left fields to type them into. The sheet also offers Add to my books, which records the payment as a transaction from an account you pick, with a category. That is worth accepting: a prepayment booked nowhere still leaves the money looking unspent in your accounts.

Before you record it, read the preview. Under What changes it shows the new EMI, the new last EMI date, and the interest saved, worked out from the prepayment's date; a backdated prepayment reworks the schedule from its own date, not from today. Record it, and the prepayment appears as its own row in the schedule while the rows still to pay are rebuilt around it.

A prepayment can be changed or removed. Open it from its line in the schedule, edit the figures, or remove it, and Lipi reworks the rows still to pay without it. Past rows are not rewritten by a removal; the change lands on what remains.

Fewer EMIs or Smaller EMI, worked example

Take an illustration, worked through the reducing-balance rule, and rounded to whole units. A loan of 2,500,000 at 10 percent a year over 10 years gives a monthly payment of 33,038 and total interest of 1,464,522 across 120 payments. After 24 payments the balance stands at 2,177,233. Now prepay 500,000 at that point.

With Fewer EMIs, the monthly payment stays at 33,038 and the loan ends at month 91 instead of month 120. Total interest falls to 982,563, a saving of 481,959 against paying the loan out untouched. The loan ends 29 months early.

With Smaller EMI, the end date stays at month 120 and the monthly payment falls to about 25,451. Total interest falls to 1,236,162, a saving of 228,360. The monthly strain drops by roughly 7,587, and the loan runs its full length.

That comparison is the whole decision, and it turns on what the same 500,000 buys in each mode. Choosing Fewer EMIs saves more than twice as much interest, because every month cut from the end is a month of interest that never accrues, while Smaller EMI saves less interest but gives breathing room every month from now on. My view is straightforward. When the monthly payment is comfortable, take Fewer EMIs first, since the saving is so much larger for the same money. When the payment itself is the strain, take Smaller EMI, because a loan you can keep paying beats a cheaper plan that breaks. Lipi rounds interest per row, so its schedule may differ from these rounded figures by a few units. The shape of the comparison does not change.

Mistakes to avoid

Recording a prepayment without booking it to an account is the most common slip. The schedule looks right, the accounts look wrong, and the money appears twice: once as a prepayment and once as still available. Book it.

Forgetting a lender penalty is the second. A penalty comes off the saving, so a prepayment that looks good before the penalty can look ordinary after it. Enter the penalty in the sheet and let the preview carry it.

Treating a calculator what-if as a record is the third. The calculator saves nothing, and future prepayments do not carry into a real loan. Enter the prepayment again on the day it happens.

Booking past payments on top of paid rows is the fourth. The loan page has a separate action for past payments, and doubling a row makes the schedule and the accounts disagree. Pay each row once, from its own line.

FAQ

Is the loan calculator free?

Yes. The calculator is free, uses the same engine as a real loan, and saves nothing. Making it a real loan opens the Premium setup with the same terms.

Do I need Premium for a bank loan?

Yes, bank loans are Premium, at Rs 1 or US$1 a month. Free users see a bank loan as a locked row. People ledgers are free, and the calculator is free.

What happens if I remove a prepayment?

Lipi reworks the rows still to pay without it. The schedule returns to what it would have been without that prepayment, and the interest saved by it disappears from the remaining rows.

Does a prepayment change past rows?

No. A prepayment lands after the last row before its date and reworks the rows from there on. Rows already paid stay as they were, except that a backdated prepayment reworks the schedule from its own date.

Can I prepay more than once?

Yes. Each prepayment is its own event with its own date, amount, and mode, and each one reworks the rows after it. The schedule carries all of them, and any one of them can be edited or removed on its own.

Where to start

Try your own figures in the free calculator first, both modes, with the penalty if your lender charges one. When the preview shows a saving you are happy with, make it a real loan and record the prepayment on the day it happens. The schedule, the interest saved, and the new payoff date will all be there to check, in one place, instead of in a spreadsheet you have to remember to update.

Read the companion guide on tracking gold in Lipi, and the standards every Lipi guide has to meet before publication, on the editorial standards page. To try the figures, open Lipi and use the free loan calculator.