1. What is EMI Calculation?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower pays to a lender at a specified date each calendar month for motor trade loans in Sri Lanka. It includes both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Loan principal amount (LKR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment that would pay off the loan over its term with a fixed interest rate.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning for motor trade businesses in Sri Lanka. It allows you to assess affordability and compare different loan options.

4. Using the Calculator

Tips: Enter loan amount in LKR, annual interest rate (common rates in Sri Lanka are 12%-18%), and loan term in months (typically 12-60 months for motor trade loans).

5. Frequently Asked Questions (FAQ)

Q1: What are typical interest rates for motor trade loans in Sri Lanka?
A: Rates typically range from 12% to 18% annually depending on the lender and borrower's credit profile.

Q2: Are there any additional charges on motor trade loans?
A: Yes, there may be processing fees (1%-2% of loan amount), insurance, and other administrative charges.

Q3: Can I prepay my motor trade loan?
A: Most Sri Lankan lenders allow prepayment after 6-12 months, often with a prepayment penalty of 1%-3%.

Q4: What documents are needed for motor trade loans?
A: Typically requires business registration documents, bank statements, tax returns, and vehicle details.

Q5: How does loan tenure affect EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures have higher EMIs but lower total interest.