Pay Down Debt or Invest — Decide with Numbers
The most common question when a lump sum lands: pay off the loan or invest it? The principle is simple — prepaying earns your loan rate with zero tax and zero risk. If your expected investment return clearly beats that, invest; otherwise repay. This calculator turns the principle into actual won amounts.
Option A (prepay) recalculates the equal-installment schedule: the monthly payment stays the same and the term shortens. Interest saved = baseline total interest − new total interest. Prepaying 30M KRW on a 200M balance (4.0%, 240 months) shortens the term by 50 months and saves about 31.3M. Option B (invest) compounds the same money monthly over the remaining term, minus 15.4% interest income tax. At 6%/yr that is about 58.6M after tax — investing wins by 27.3M.
Tax conversion matters: with 15.4% tax, a 4% loan rate equals about 4.73% pre-tax (and 5.5% equals 6.50%). The calculator also finds your break-even pre-tax return — 4.03%/yr in the example above. Only if you can confidently beat that does investing win. In monthly mode, extra loan payments are compared against monthly investing the same way.
Tips: even when investing wins on paper, remember prepayment is guaranteed while investment returns are expectations. Floating-rate loans make repayment more valuable if rates rise, and any prepayment penalty (typically 0-1.4% depending on remaining term) should be subtracted from the savings. Use the compound interest calculator for pure investment growth and the mortgage calculator for repayment planning. This tool is a simulation dependent on your assumptions — not investment advice.