Loan Payoff Calculator
Enter your loan amount, interest rate and term to see your monthly instalment, total interest and full payoff time. Add an optional extra monthly payment to see how much faster and cheaper you could clear it.
How this calculator works
The monthly instalment uses the standard amortising-loan formula. Each month, part of your payment covers the interest charged on the remaining balance and the rest reduces the principal. As the balance falls, more of every payment goes toward principal, which is why an extra payment early on saves so much interest.
Good to know
Results are estimates for planning only and assume a fixed interest rate and equal monthly payments. Banks may apply fees, insurance or a different compounding method, so your actual instalment can vary. Always confirm the final figures with your lender before committing.
Worked example
Take a Rs. 2,500,000 loan at 16% p.a. (reducing balance) over a 5-year term. Running that through the formula above gives a monthly instalment of Rs. 60,795. Add an extra Rs. 15,000 to every monthly payment and the picture changes considerably:
Rs. 2,500,000 loan, 16% p.a., 5-year term
| Scenario | Payoff time | Total interest | Total repaid |
|---|---|---|---|
| Scheduled payments only | 60 months | Rs. 1,147,709 | Rs. 3,647,709 |
| + Rs. 15,000/month extra | 44 months | Rs. 815,849 | Rs. 3,315,849 |
That extra Rs. 15,000 a month clears the loan 16 months sooner and saves Rs. 331,860 in interest, more than 20 times the size of a single extra payment, because every rupee of it stops accruing interest for the rest of the original term.
Frequently asked questions
What's the difference between reducing balance and flat rate interest?
This calculator uses reducing balance interest, where each month's interest is charged only on what you still owe, so the interest amount falls as your balance falls. This is the standard method for housing, personal and vehicle loans in Sri Lanka. Flat rate (or add-on) interest charges you on the original loan amount for the full term, even after you've repaid most of it, so a flat rate that looks lower than a reducing balance rate can actually cost more overall. If a lender quotes a flat rate, convert it to a reducing balance equivalent before comparing offers.
Do Sri Lankan banks charge a fee for paying off a loan early?
It depends on the lender and the loan agreement. Many banks apply an early or partial settlement fee, commonly a percentage of the amount prepaid, though some waive it after a minimum holding period. There's no single rate set across the industry, so check your loan agreement or ask your bank before making a large extra payment.
Does an extra payment automatically go toward my principal?
Not always. Some banks apply extra payments toward your next scheduled instalment instead of reducing the principal balance, which won't save you any interest. When you make an extra payment, tell your bank explicitly that it should be applied to the principal, and check your updated balance afterward to confirm.
Does the loan term length change how much interest I pay in total?
Yes, significantly. A longer term lowers your monthly instalment but stretches out interest charges, since you carry a balance for longer. In the example above, taking 5 years to repay Rs. 2,500,000 at 16% costs over Rs. 1.14 million in interest; a shorter term or extra payments cut that total sharply because less time passes before the balance falls to zero.
Want the full breakdown? Read Extra loan payments: how much interest do they really save? →