Used to calculate the amount of interest a Borrower will pay. 30/360, Actual/360, and Actual/365 will each lead to the Borrower paying different amounts of interest despite otherwise identical loan terms. Borrower will pay the least amount of interest with 30/360 and the most with Actual/360.
Commercial - Actual 360 (30 360) WORD
Commercial - Actual 360 (Effective Rate) vs Actual 360 (30 360) WORD
Commercial - Actual 360 (Effective Rate) WORD
30/360 accrues interest over a presumed 30-day month over a presumed 360-day year.
Actual/360 or 365/360 accrues interest over the actual number of days spread over a presumed 360-day year. The result is a slightly higher actual interest accrual when you use 30/360.
Most of our customers use 30/360.
30/360 Sample:
If your lender settings are to have interest calculated based on the actual number of days in such a month over 360. Principal and interest payments are based on 30/360, generally for uniformity over that period. One can find the interest calculation portion of the note in section C.2. Section C.4 of the Note identifies monthly payments for interest only; the monthly payment is estimated on the full loan amount outstanding, based on the number of days in the month preceding the payment (eg. an August 1 payment is based on the number of days in July). Section C.5 of the Note identifies monthly payments of principal and interest; the initial P&I payment is based on the entire loan amount outstanding, amortized over x-amount of years at the fixed rate.
Actual/360 Sample:
Actual/365 Sample:
