Pay or Invest ArbitrageFY 2026-27
Mathematically decide if you should use surplus funds to prepay high-interest debt or invest in equity/debt markets.
Quick Summary: Pay or Invest Arbitrage
The decision to prepay a loan or invest depends on the 'Arbitrage Spread'. Calculate your post-tax loan cost (Bank Rate minus Tax Shield like Section 24b) and compare it to your post-tax expected investment return. If the investment return is higher by more than 1-2%, investing is superior. Otherwise, prepaying provides a guaranteed, risk-free 'return' by saving interest.
How to use the Pay or Invest Arbitrage
- 1
Enter Loan Rate
Input your current loan interest rate and tax slab.
- 2
Input Investment Yield
Enter the expected annual return from your mutual fund or stock portfolio.
- 3
Review Decision Summary
The tool calculates the net wealth difference between prepaying and investing over your remaining tenure.
Related Calculators
Regulatory Disclaimer · FY 2026-27
Last verified May 2026
Nature:Calculator platform and is NOT a SEBI-registered Investment Adviser. All calculations are indicative.
Risk:"Investments in securities market are subject to market risks. Read all related documents carefully before investing."
Consult a SEBI-registered IA or CA for personalised advice.
9 out of 10 traders in F&O incurred net losses (SEBI 2023). Tax estimates based on IT Act 2025. Trezoriq is not liable for financial decisions based on results.