Could some kind person please assist me with the process fo calculating interest on a loan.
For example if I have a interest only loan of 100k at 7% then the annual interest charge is 7k which translates to $19.17 daily ?
Thanks
hi McHenry
yes provided its not a leap year and its or 80cents per hr if you work it out that way not sure per second but some one here will tell you.
I usually work out per annum per month or max per week never been asked per pay as a tenant doesn’t usually rent per day.
I suppose a resort style investment may.
In answer to your question yes as interest onlyhere to help
The reason I wanted to know the daily figure is that I was looking at my CBA loan statement and could not understand how they calculated the interest amounts…
On a principal of 157k @ 6.64% I was charged:
1/9/05 $885.39
3/10/05 $856.83
1/11/05 $885.39Looks like the day the interest is charged corresponds to the closest working day and the 1/9/05 charge must relate to the month of Aug as $885 would correspond to a month with 31 days and Sept only has 30.
Thanks
Hey McHenry,
I’ve had that conversation with the CBA before regarding that matter.
It all boils down to their squirrelly CBA computer over in head office in Sydney.
The guys running it over there must be smokin’ that left handed tobacco, ‘cos I’ve been charged amounts that exactly correspond to 26 days and/or up to 34 days.
When questioned, the answer came back as “It’s just a system process IT thingy in the Bank’s computer and we don’t really know why, but we suspect it has something to with it ruling off the month’s at C.O.B. last Friday’s of the month type of thing.”
After I picked myself up off the floor from laughing so hard, I put it in the same basket as “I’m sorry, that’s just our Bank Policy” type of statement.
If you add up the months it eventually evens itself out, so you don’t lose out.
You’ll find you have more productive things to do than butt heads with the CBA computer system…an Act of parliament wouldn’t even help.
Banks calculate interest on a daily balance for loans and deposits, and then capitalise (ie.add it to the balance) monthly. It doesn’t really matter if the do this every 29 days, 30 days or whatever – the difference is likely to be only cents. For a loan, longer periods between capitalising would be better for you since it means less compounding of interest (ie. interest on interest). As to which day of the month the bank does the capitalising, it all depends on when they run the program – sometimes it’s convenient to do it over a weekend since it must use up considerable computer time. Hence the slightly shorter or longer periods.
I once rang then Banking Ombudsman about this issue (especially on P and I payments) and the bank doesnt even have to tell you the formula to work out your monthly repayments. So long as you have signed the mortgage agreement agreeing to the specific repayment amount.
There pathetic, computer programs are written by humans, what if there is a typo!
20c to me is different to 20c X number of customers to them!!You can use Excel to calculate P&I repayments on loans if you are interested:
1. Open Excel.
2. Under the New Workbook menu on the right click on “General Templates”
3. Choose “Spreadsheet Solutions” tab.
4. Choose “Loan Amortization”Life is like a box of chocolates – you never know what you’re going to get!
I write those computer programs [computer] that rip you off 20c and everyone else also. But the bank doesn’t see it , I use all those 20c to pay off my own loan. No typo, it’s deliberate. [devil]
Mal
Getting out of your comfort zone, can help you become comfortable
Originally posted by Shwing:I write those computer programs [computer] that rip you off 20c and everyone else also. But the bank doesn’t see it , I use all those 20c to pay off my own loan. No typo, it’s deliberate. [devil]
Mal
Getting out of your comfort zone, can help you become comfortable
What type of programs are you referring to Mal?
Sorry Marty, I was refering to Stuck-at-two’s comment above –
“There pathetic, computer programs are written by humans, what if there is a typo!
20c to me is different to 20c X number of customers to them!!” – regarding, not being able to work out how the interest calculations are done.
I develop financial applications, including those pesky interest calculations, that people can’t figure out how to get the same number.Mal
Getting out of your comfort zone, can help you become comfortable
As soon as you say “its for an investment” you lose protection under the Consumer Credit Code. So Mal can make his programs with the worst rounding errors and also annoy those poor finance mushrooms who need to reconcile the GLs and theres not a thing you can do.
However if you are a consumer, not investor, its a different story, in this case the banks pay $1000 per hour to get the likes of a KPMG or PWC partner in to sign on the dotted line that the system complies with UCCC!
If you have a consumer loan and you find issue with it, take it up with the ombudsman. You may find the lender will cop a nasty fine and Mal will get fired!
Mat
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