Interest Calculation Methods Used by CU*BASE
Following is a “quick reference” showing the formulas used by CU*BASE when calculating interest for loan accounts.
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Click here for dividend calculation methods for savings and certificate accounts.
Interest Calc. Type 0 - 365 Daily Interest
The standard daily interest calculation using a 365 or 366-day year. Not for mortgage-type loans. Interest is accrued each day using a Daily Interest Factor (per diem).
|
Interest Rate |
/ |
Days In Year |
= |
Daily Interest Factor |
|
xx.xxx for example for 10.75% you would enter .1075 in your calculator. |
|
36500 (non-leap year) |
|
.xxxxxxxxx |
|
|
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36600 (leap year) |
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|
|
Daily Interest Factor |
* |
Current Balance |
= |
Daily Interest Amount |
|
.xxxxxxxxx |
|
Xxxxxxx.xx |
|
xxxxxxx.xx |
|
Daily Interest Amount |
* |
No. days since interest was paid |
= |
New Accrued Amount |
|
xxxxxxx.xx |
|
|
|
xxxxxxx.xx |
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Sample: |
For a $2500 loan at 12.50% for one day the calculation would be:
.1250/36500 = .000342465 |
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.000342465 * 2500.00 = .856 |
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.856 rounded to .86 as the Daily Interest Amount |
Interest Calc. Type 3 - 360-Day Mortgage (in Arrears)
SEE ALSO: CU*BASE Mortgage Products: 360-Day Interest Calculation
Loan origination will not calculate short interest. Interest due is left equal to zero.
Monthly calculation of interest is in arrears. On the 20th of each month if interest due is equal to zero, then the current month's interest is calculated and added to interest due.
If the interest due is not equal to zero on the "day to calculate interest," then the system will monitor interest due every night and calculate the current month's interest when it becomes zero, or on the 1st of the next month, whichever occurs first.
If the current balance is greater than INTBAL on the account on the day that interest is being calculated, then INTBAL is set equal to the current balance. Otherwise, the INTBAL is equal to last month's INTBAL minus last month's principal payment amount.
|
Interest Rate |
/ |
1200 |
= |
MNTRAT |
|
Xx.xxx |
|
|
|
??.xxxxxxx |
|
INTBAL |
* |
MNTRAT |
= |
NEWINT |
|
xxxxxxxxx.xx (rounded) |
|
??.xxxxxxx |
|
??.xx |
The interest due on the account is adjusted by adding this NEWINT to the existing amount.
A new INTBAL is calculated and stored on the account using the following calculation:
|
Fixed Payment |
- |
NEWINT |
= |
PRINCP |
|
|
|
??.xx |
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xxxxxxxxx.xx (rounded) |
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If less than zero, change to zero. |
|
INTBAL |
- |
PRINCP |
= |
INTBAL |
|
xxxxxxxxx.xx (rounded) |
|
xxxxxxxxx.xx |
|
xxxxxxxxx.xx (rounded) |
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|
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If less than zero, change to zero. |
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Interest Calc. Type 4 - 360/365 Daily Interest
This calculation acts like a 365-day simple daily calculation but looks like a 360-day calculation where each month has only 30 days. Like the simple 365-day interest calc. type, this method calculates interest accruals every day using a daily per diem interest amount. But instead of using 365 or 366 days when figuring the daily interest amount, the rate is always divided by 360 days.
|
Interest Rate |
/ |
360 |
* |
Loan Balance |
= |
Daily Interest Factor |
|
xx.xxx |
|
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|
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.xxxxxxxxx |