Simple formula for figuring interest

[stephen shouse]

I am trying to get a formula for figuring the interest on a loan. Payable every month. I was told this would work and is used quite often. Amount owed X interest rate X number of days in month, divided by 365. This should give you the amount owed that month on interest???

 

[tkhunny]

If you have a "Simple Interest" loan, that probably will be close.

There are MANY ways to calculate monthly interest credits or charges.

What are the terms of your loan?

 

[Denis]

Amount owed X interest rate X number of days in month, divided by 365. This should give you the amount owed that month on interest???

Talking Canadian, yes: IF the amount owing is constant during the month.

$5000 owed every day in Feb/2004 at rate of 8%:
.08/366 * 29 * 5000 = 31.693~ = 31.69

If the amount owed fluctuates up and/or down, the daily balances owing
are added, then divided by the number of days in the month: this becomes
the "amount owed" for interest calculation.

TK will be pleased to know that Canadian lenders use "floor" with interest calculations :!:

 

[tkhunny]

What? Truncating in the customer's favor? Wow!