Minor Description
Given that the interest rate period on a loan is monthly and client has chosen to make weekly repayments, it makes more sense to assume that there are 4 weeks in the month and 12 months in the year which comes to 48 weeks rather than assuming the traditional 52 weeks in the year.
For example if a loan has a flat interest rate of 2% Per month and the principal is 1000 and the repayments are weekly, weekly interest is currently computed as follows:
interest per week = (0.02*12*1000)/52 = 4.61538
it would make more sense if interest per month is computed as follows:
interest per week = (0.02*12*1000)/48 = 5
In other words there is no need for computing weeks in a year when we are dealing with a month. There are 4 weeks in a month and this assumption calculates a more reasonable figure as compared to when we compute weeks in year.
Attachments
Issue Links
- links to