Sri Lanka Loan Early Settlement Calculator

Sri Lankan bank loans and modern leasing facilities use the reducing-balance(declining-balance) method: interest each month is charged only on the capital still outstanding, and every equal installment pays that month's interest first, with the rest reducing the capital. Early on, most of your installment is interest and the capital falls slowly; later, the balance drops quickly. That is why the amount to settle a loan is never just "what you borrowed minus what you paid."

The calculator applies four cited steps. Let P be the loan amount, i the monthly rate (annual rate ÷ 12 ÷ 100), n the term in months, k the installments paid, and f the fee fraction:

1. Monthly installment: EMI = P·i / (1 − (1 + i)^−n). This is the standard amortization formula every commercial bank uses (for an interest-free loan where i = 0, EMI = P / n).
2. Outstanding balance after k payments — the present value of the remaining n − k installments: B = EMI · (1 − (1 + i)^−(n−k)) / i. This is the capital that closes the loan before any fee.
3. Interest still payable if you keep going: EMI·(n − k) − B. The fee is f · B, and the total payoff is B + fee.
4. Net interest saved: interest remaining − fee. That is the real benefit of settling: the future interest you avoid, less the one-off charge.

To keep the result trustworthy, the tool computes the outstanding balance two independent ways — the closed-form present-value formula above, and a month-by-month amortization ledger that mirrors a bank statement — and shows that they agree to a fraction of a rupee. The one figure the tool cannot know is your fee: it is set in your own loan agreement, so you enter it. The Central Bank of Sri Lanka's Financial Consumer Protection Regulations No. 01 of 2023 require every lender to allow prepayment and to disclose that charge, so you can always ask your branch for it in writing.

• CBSL — Financial Consumer Protection Regulations No. 01 of 2023 (prepayment + fee disclosure)
• CBSL — Financial Consumer Protection (how to demand your settlement figure in writing)
• Central Bank of Sri Lanka — official site

The reducing-balance amortization method used here is the universal identity applied by every CBSL-licensed lender, and the same method cited in this site's loan EMI calculator. The formulas and the CBSL disclosure rule were last cross-checked on 2026-07-05. The settlement fee is lender-set; always confirm the binding figure with your bank in writing.