1. What is the Personal Loan Payment Formula?

The personal loan payment formula calculates the fixed monthly payment required to repay a loan over a specified term. This is the standard formula used by Hatton National Bank (HNB) and other financial institutions in Sri Lanka for personal loans.

2. How Does the Calculator Work?

The calculator uses the personal loan payment formula:

Where:

• \( P \) — Principal loan amount (LKR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Number of monthly payments (loan term in months)
• \( PMT \) — Monthly payment amount (LKR)

Explanation: The formula calculates the fixed payment required each month to pay off the loan over the specified term, including both principal and interest components.

3. Importance of Loan Calculation

Details: Understanding your monthly payment helps with financial planning and ensures the loan is affordable. It allows you to compare different loan options and terms.

4. Using the Calculator

Tips: Enter the principal amount in LKR, annual interest rate as a percentage (e.g., 12 for 12%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical interest rate for HNB personal loans?
A: Interest rates vary based on creditworthiness and market conditions, typically ranging from 12% to 20% annually.

Q2: Are there any additional fees?
A: HNB may charge processing fees or other charges. This calculator only computes the principal and interest components.

Q3: Can I prepay my HNB personal loan?
A: Yes, but prepayment penalties may apply. Check with HNB for their current prepayment policy.

Q4: How does loan term affect my payment?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total interest.

Q5: Is this calculation accurate for all HNB loans?
A: This provides an estimate. Actual payments may vary based on specific loan terms and conditions.