 Sam
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 Posted: Fri Mar 26, 2004 6:55 am Post subject: Variable and Constant method of calculating interest |
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The Constant method calculates interest regardless of the number of days between each loan payment.
The Variable method calculates the interest for each loan payment based on the number of days since the last payment.
For example, Constant method finds out the interest regardless of the month for which it is calculating interest. It calculates the same interest for the months of January, February, April, where the number of days for each month is 31, 28/29, 30 respectively. On the other hand, the Variable method calculates a different interest for every month depending upon the number of days in each subsequent payment. It calculates interest either in every 15 days, 30 days, 20 days or 45 days etc. |
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