FolioPactUnderstand interest methods, balances and due dates
A rate alone does not define a loan calculation. The unit, time convention, balance basis and collection dates must all be explicit. FolioPact rejects unsupported combinations rather than silently converting them.
Identify the rate unit
Distinguish an annual percentage, monthly percentage, weekly percentage and fixed monetary return. A monthly rate is not automatically treated as an annual rate divided by twelve.
Choose how time is counted
Actual days / 365 uses actual elapsed days and a fixed denominator of 365. Actual/actual ISDA splits across calendar years. Calendar months use anchored month periods. Weekly and 30/360 methods have different rules; select the method explicitly named in your agreement.
Choose the principal basis
Money still lent after repayments uses the outstanding balance. Original amount lent keeps the original contractual basis after partial cash repayments. Capitalised interest is separate and bears interest only when that term is enabled.
Set collection dates separately
Interest accrual and payment frequency are independent. Every two months differs from twice a month. A payment day of the 30th falls on February's last day and returns to the 30th in March. Last day of the month is its own choice.
Check a simple example
For INR 100,000 at 12% per year, Actual/365, with no intervening events, 30 elapsed days produces 100000 × 0.12 × 30 / 365 = INR 986.30 after rounding. One full anchored calendar month at an explicitly agreed 1% monthly rate produces INR 1,000.00. Different conventions legitimately produce different results.
Read the dated statement
Check cash principal, capitalised interest, interest due, accrued interest not yet due and charges separately. Accrual is start-inclusive and end-exclusive. A closing-date statement includes events on that date but excludes interest for that date's following interval.
Check your result
- The example reconciles with independently worked arithmetic.
- The rate unit and convention are compatible.
- The payment date and principal basis match the agreement.