Getting to zero on ₹20 lakh of debt
Debt-free is a date, not a mood. ₹20 lakh of unsecured borrowing at around 13.5% clears in three years on ₹67,871 a month — and every month you shorten that by, you keep interest that would otherwise have left the household. The order you pay in matters as much as the amount.
- Debt to clear
- ₹20L
- Clear in 3 years
- ₹67,871/mo
- Clear in 5 years
- ₹46,020/mo
- Interest saved by 3 vs 5
- ₹3.18L
unsecured, at about 13.5%
the usual sweet spot
easier monthly, dearer overall
for finishing two years sooner
How fast you want to be done
| Timeline | Monthly payment | Interest paid | Total paid |
|---|---|---|---|
| 12 months | ₹1,79,104 | ₹1.49L | ₹21.49L |
| 24 months | ₹95,554 | ₹2.93L | ₹22.93L |
| 36 months | ₹67,871 | ₹4.43L | ₹24.43L |
| 48 months | ₹54,153 | ₹5.99L | ₹25.99L |
| 60 months | ₹46,020 | ₹7.61L | ₹27.61L |
Which debt to attack first
| Debt type | Typical rate | Priority |
|---|---|---|
| Credit card revolving balance | 36-42% | 1 — nothing else comes close |
| Personal loan | 11-18% | 2 |
| Consumer durable / flat-rate loan | 18-24% effective | 2 — check the effective rate, not the quoted one |
| Gold loan | 9-12% | 3 — cheap, but the jewellery is at risk |
| Car loan | 9-11% | 4 |
| Home loan | 8-9% | 5 — the cheapest debt you will ever have |
Highest rate first saves the most money. Smallest balance first builds the most momentum. Pick the one you will actually stick to.
Avalanche or snowball
The avalanche method pays the highest interest rate first and is mathematically optimal. The snowball method clears the smallest balance first and wins on morale, because an account that closes is a visible result. On ₹20 lakh the difference in total interest is usually modest — the difference in whether you finish is not.
Stop the bleeding before you start bailing
A debt plan fails if new debt keeps arriving. Before the first extra payment, park the credit cards, cancel the auto-renewing EMI offers, and make sure a small emergency fund — even a month of expenses — exists. Without it, the next unexpected bill goes straight back onto a card.
Consolidation: sometimes real, often a reset
Moving several expensive debts into one cheaper loan genuinely helps if the new rate is lower and the tenure is not much longer. It becomes a trap when a three-year problem is stretched into a seven-year one for a smaller EMI. Compare total interest, not the monthly figure.
Where FamTally comes in
FamTally holds every loan the family carries in one place, ranks them by what they actually cost — including converting flat rates to their real reducing-balance equivalent — and shows the exact month each one closes. Record a part-payment and the payoff date moves in front of you. The AI assistant can tell you which debt to attack first based on your own cashflow. Free to use.
Stop doing this in a spreadsheet
FamTally keeps your loans, income, expenses, assets, insurance and goals in one place, forecasts five years ahead, and answers questions about your own numbers. Free, and built for Indian families.
Start freeQuestions people ask
How long will it take to clear ₹20 lakh?
At ₹67,871 a month, three years. At ₹46,020 a month, five — costing ₹3.18L more in interest.
Which loan should I repay first?
The one with the highest interest rate, which is almost always a credit card, then personal and flat-rate consumer loans. Home loans come last — they are the cheapest debt available to a household.
Should I use my savings to clear debt?
Beyond your emergency fund, usually yes. Savings earning 6% while debt charges 14% is a guaranteed 8% loss. Keep the emergency fund intact, though — clearing debt by emptying it tends to recreate the debt.
Will prepaying hurt my credit score?
No. Closing a loan early is recorded as a settled account in good standing. Missing EMIs is what damages a score, not finishing ahead of schedule.