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F. Naz
F. Naz, B.Com
Category: Single Problem
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Experience:  Have completed B.Com and CA Finalist
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I'm hoping to find the formula on how a finance company

Customer Question

Hi, i'm hoping to find the formula on how a finance company calculate monthly repayment.
Initially the only information that I have is that the loan amount is for £500, the interest rate (simple interest) is fixed at 0.7% per day, I want to repay over 5 installments and the term of the loan is 144 days.
i'm trying to work backwards by finding the monthly repayment and then I can calculate what element is capital and what is interest. Any amortization calculations online assume payments are for a full month. Is there a formula out there that works out the monthly repayment for uneven days in a month? I know that the 1st repayment will be taken 22 days after the loan is drawn down.
Submitted: 2 years ago.
Category: Single Problem
Expert:  F. Naz replied 2 years ago.
Will come back to you soon, thanks.
Expert:  F. Naz replied 2 years ago.
http://wikisend.com/download/153750/Installment on day basis.xls Your answer is at above link, thanks.
Customer: replied 2 years ago.
Hi,thanks for your answer, however i do not believe it to be correct.I got a similar answer to you, however i used the rate of 0.2016, 144 days x.007 / 5, so an average monthly period of 28.8 days. My monthly installment being £167.78.As I explained in my question, the initial period was 22 days from the time the loan was drawn down until the 1st installment, therefore at the end of month 1 the interest would be correctly calculated at £77 and then the capital can be calculated by deducting the interest from the installment figure.I have contacted a number of maths forums and they have all said that the amortization formula that you and i have both used assumes that each period between the loan is equal rather than month 1 being 22 days and then 30 days in one month and 31 days in another month.the formula that I am trying to find is one that installments can be calculated for an uneven amount of days per period.Hope you can helpthanksVictoria
Expert:  F. Naz replied 2 years ago.
http://wikisend.com/download/831346/Installment on day basis2.xls I have tried to solve it and it is at above link, thanks.
Expert:  F. Naz replied 2 years ago.
http://wikisend.com/download/831346/Installment on day basis2.xls I have tried to solve it and it is at above link, thanks.
Expert:  F. Naz replied 2 years ago.
Did it work?
Customer: replied 2 years ago.
All 5 repayments should be the same amount.if you look at your 1st monthly repayment, the interest should be £77 as its 22 days x 0.007 x 500
Expert:  F. Naz replied 2 years ago.
You look in the interest column it is 76.65 rounded to 77 for 1st installment.

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