" wrote:
amalecki wrote...
I am using Excel 2002 I am trying to calculate a fixed monthly payment
on a
24 month loan. The problem is the bank uses a 360 day basis when they
calculate the fixed monthly payment. Excel's PMT formula has a 365 day
basis.
....
If you have 24 identical monthly payments, the only trick is in
calculating the *effective* monthly interest rate. That is, whether you
use 360, 365 or 366 day years, there are always 12 months in a year.
Your effective interest rate is the rate used for compounding, but
banks like to quote *nominal* interest rates which are lower than
annualized effective interest rates. (Truth in lending?!) Anyway, if
your bank quotes nominal interest rates for daily compounding, then
what I suspect is that the bank calculates the monthly effective
interest rate as
(1 + Nominal Rate / 360)^30 - 1
rather than as
(1 + Nominal Rate / 365)^(365/12) - 1
For a 6.0% nominal interest rate, the former returns an effective
monthly interest rate of 0.5012102% (so an annual effective rate of
6.18312%) while the latter gives 0.5012108% monthly (6.18313%
annually).
What's the stated interest rate and the ratio of your monthly payment
to the loan amount?
amalecki writes:
The only interest rate I have from the Bank is 6%; the monthly payment the
bank calculated is $9,465.67, based upon a loan amount of $213,402.24.
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