Loan or lease? Different interest calculations

I had the pleasure of visiting Sri Lanka and during this stay, I rented a room in a family house via Airbnb. I had many conversations with my hosts and during one of them, it emerged that they had taken a loan, or lease as it seemed to be called, which I will outline below, as it seems quite wrong and big fraud and if not that, at least a scam.

- Bernt Johansson

Loan sum: 2,000,000 Rps

Interest rate: 16%

Loan period: three years.

The calculation for monthly payments was done like this:

Capital repayments, 2,000,000 divided by the loan period of 36 months, gives 55,555 Rps a month.

The interest was calculated as 2,000,000 times 16% equals 320,000 per year, times three which gave a total interest payment of 960,000. This was then divided by 36 giving a monthly interest payment of 26,666.