1. What is the Leasing Payment Formula?

The leasing payment formula calculates the fixed monthly payment required to repay a loan over a specified term at a given interest rate. This is the standard calculation used by financial institutions in Sri Lanka for leasing arrangements.

2. How Does the Calculator Work?

The calculator uses the leasing payment formula:

Where:

• \( PMT \) — Monthly payment (LKR)
• \( PV \) — Present value or loan amount (LKR)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of months

Explanation: The formula accounts for both principal and interest payments over the loan term, with payments remaining constant throughout the lease period.

3. Importance of Leasing Calculation

Details: Accurate leasing calculations help borrowers understand their financial commitments and compare different leasing options from various financial institutions in Sri Lanka.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is a typical leasing rate in Sri Lanka?
A: Rates vary by institution and vehicle type, but typically range from 12% to 18% annually for vehicle leases.

Q2: Are there other fees besides the monthly payment?
A: Yes, most leases include processing fees, insurance, and possibly a final balloon payment depending on the terms.

Q3: How does the term length affect payments?
A: Longer terms reduce monthly payments but increase total interest paid over the life of the lease.

Q4: Can I prepay my lease in Sri Lanka?
A: Most institutions allow prepayment but may charge a penalty fee - check your specific contract terms.

Q5: Is this calculator accurate for all lease types?
A: This calculates standard fixed-rate leases. Some specialized leases with variable rates or balloon payments may require different calculations.