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 formula is used by Bank of Ceylon and other financial institutions to determine loan payments.

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 divided by 12)
• \( n \) — Number of monthly payments (loan term in years × 12)
• \( PMT \) — Monthly payment amount (LKR)

Explanation: The formula accounts for both principal and interest payments over the loan term, with payments being equal each month.

3. Importance of Loan Calculation

Details: Accurate loan payment calculation helps borrowers understand their financial commitments and plan their budgets accordingly.

4. Using the Calculator

Tips: Enter the principal amount in LKR, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in the monthly payment?
A: The monthly payment includes both principal and interest components. Early payments consist mostly of interest, while later payments consist mostly of principal.

Q2: How does loan term affect payments?
A: Longer terms result in smaller monthly payments but higher total interest paid over the life of the loan.

Q3: Are there other fees not included in this calculation?
A: This calculator shows principal and interest only. Bank of Ceylon may charge additional fees or insurance that would affect total costs.

Q4: Can I pay off my loan early?
A: Most loans allow early repayment, but check with Bank of Ceylon about any prepayment penalties or fees.

Q5: How often are interest rates updated?
A: Bank of Ceylon may adjust rates periodically. Always confirm current rates when applying for a loan.