1. What is the Loan Payment Formula?

The loan payment formula calculates the fixed monthly payment required to fully repay a loan over its term, including interest. This is the standard formula used by Bank of Ceylon and other financial institutions in Sri Lanka.

2. How Does the Calculator Work?

The calculator uses the loan payment formula:

Where:

• \( P \) — Principal loan amount (LKR)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)
• \( PMT \) — Monthly payment amount (LKR)

Explanation: The formula accounts for compound interest over the life of the loan, calculating a fixed payment that covers both principal and interest each month.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments, compare loan options, and plan their budgets effectively.

4. Using the Calculator

Tips: Enter the principal amount in LKR, annual interest rate as a percentage (e.g., 12.5 for 12.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include Bank of Ceylon's fees?
A: This calculates principal and interest only. Additional fees or insurance may apply to actual loans.

Q2: How does changing the term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total cost.

Q3: What interest rates does BOC offer?
A: Rates vary by loan type and market conditions. Check with Bank of Ceylon for current rates.

Q4: Can I calculate for different payment frequencies?
A: This calculator assumes monthly payments. Other frequencies require formula adjustments.

Q5: How accurate is this calculator?
A: It provides theoretical results. Actual loan terms may vary based on creditworthiness and bank policies.