With this knowledge, hopefully you’ll be able to save a few dollars in interest the next time you obtain a loan. As such, it’s important to be aware of these accrual methods, their differences, and how each one is calculated. When we got to this point, the Loan Operations manager would always turn to me and say, “what’s the difference between 30/360, Actual/360, and Actual/365, and which one should we go with?”Īlthough minor, the differences between loan accrual methods can result in multi-thousand dollar variations in interest paid over the term of a loan. In every installation, there came a point where the bank would have to decide which accrual method to use for its loan portfolio. In a former life, I helped banks install loan servicing software.
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