Posted on: 30th Apr, 2009 04:17 pm
Im trying to calculate a principle and interest schedule (for an installment loan) based on daily interest calculations. Im not really sure where else to go, but from what I understand this is the base formula im using:
Example:
APR: 20%
Principle: 1000
Payments: 10
Term Unit: Month
Daily APR% = 20/(100*365) = .005479452
First Month Interest = 100(principle)*30(days in month)*Daily APR% = 16.43
Second Month Interest = 100*60*Daily APR% = 32.87
Third Month Interest = 100*90*Daily APR% = 49.31
so on and so on! 30,60,90 are only estimates for the days in month. We'll be using actual numbered days when calculating the real loans.
It seems logical that the interest payments would grow over time because we're calculating the interest based on how long the 100 dollar principle has been loaned out. I figured if I wanted a steady payment plan, I would take the total amount of interest and divide it out to the number of payments...
am I doing something severely wrong here? For some reason the amortization schedule calculates the interest much higher.
Example:
APR: 20%
Principle: 1000
Payments: 10
Term Unit: Month
Daily APR% = 20/(100*365) = .005479452
First Month Interest = 100(principle)*30(days in month)*Daily APR% = 16.43
Second Month Interest = 100*60*Daily APR% = 32.87
Third Month Interest = 100*90*Daily APR% = 49.31
so on and so on! 30,60,90 are only estimates for the days in month. We'll be using actual numbered days when calculating the real loans.
It seems logical that the interest payments would grow over time because we're calculating the interest based on how long the 100 dollar principle has been loaned out. I figured if I wanted a steady payment plan, I would take the total amount of interest and divide it out to the number of payments...
am I doing something severely wrong here? For some reason the amortization schedule calculates the interest much higher.
Hi
Interests are calculated on a monthly basis. The amortization schedule is prepared based on the monthly payments you make towards the interest and the principal. Daily APR isn't taken into account while preparing the amortization schedule on a monthly basis. On this site, there are Mortgage Calculators to help you get the amortization schedule. You can use them to see what interest they calculate. As far as daily APR calculation is concerned, I'm not quite aware of the correct formula. You need to contact your lender to know about it.
Interests are calculated on a monthly basis. The amortization schedule is prepared based on the monthly payments you make towards the interest and the principal. Daily APR isn't taken into account while preparing the amortization schedule on a monthly basis. On this site, there are Mortgage Calculators to help you get the amortization schedule. You can use them to see what interest they calculate. As far as daily APR calculation is concerned, I'm not quite aware of the correct formula. You need to contact your lender to know about it.
come on! :)
someone HAS to know the answer im looking for. I need a daily amortization formula to calculate interest for a installment loan. Can anyone help? Let me know. I've searched everywhere for the calculators and cant seem to find what im looking for. I need a FORMULA... im trying to write some software :P
Thanks in advance
someone HAS to know the answer im looking for. I need a daily amortization formula to calculate interest for a installment loan. Can anyone help? Let me know. I've searched everywhere for the calculators and cant seem to find what im looking for. I need a FORMULA... im trying to write some software :P
Thanks in advance
you're going to need an actuary.
I wrote a very complicated loan program in excel for Chevy Chase bank a few years ago. So, I know it can be done in excel. If you have the payment formula for excel, you can change any portion of the formula from 12 to 365. You will be essentially changing from monthly to daily.
