Thursday, September 15, 2005

Home Loan Interest

Figured it out... ING Bank actually calculate simple daily interest, charged - and compounded - monthly. I presumed they calculated interest compounded daily and charged monthly.

Their Terms and Conditions are ambiguous on that point, I think.

"7) How We Calculate Interest
We calculate interest each day by applying
the daily
percentage rate to the amount you owe us at the
end of that day.
The daily percentage rate is equal to
the interest rate applicable to your
loan on that day
divided by 365. The end of each day for
interest charges is 5.00pm Sydney time."

National Australia Bank has a worked example on this page. This is an example of Lean Consumption, Womack and Jones' next crusade.


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