Maina, That¹s not the correct formula for how Mifos makes interest calculations. That formula is for converting an interest rate for a period less than 360/365 to APR. This allows MFI¹s to enter in an interest rate that will get them the repayment schedule they are expecting.
As for your scenario, you tried this on Mifos? I would look at how you are setting your grace period, is it just for principal or for principal and interest? That may be where your issue lies. Ryan On 5/19/10 17:53, "Maina Wachira" <[email protected]> wrote: > Hi People, > > I wanted to ask how Mifos calculates interest for Loan products. > > I was going through the mail on the list and I found this (Interest Amount * > Period of Interest (360/365)) / (Principal Amount * 50 * 7) {50 was the number > of weekly instalments. > > Based on the above, I wanted to find out how it calculates interest on a > monthly basis. > > The reason I was asking is because I have come across this scenario > A client charges a flat rate of 15% per year and they payment is done in > 10 monthly instalments, and there is a grace period of 2 months. However if > you set the number of repayment instalments as 10, the interest is different > (it calculates for 10 months and not for the whole year) > For example if I issue a loan of 100,000 for 12 months the interest calculated > is 15,000. > If I issue a loan of 100,000 for 10 months the interest calculated > is 12,500. > > Shouldn¹t the interest be calculated for the entire year or what is the way > around this? > > > > ------------------------------------------------------------------------------ > > > _______________________________________________ > Mifos-users mailing list > [email protected] > https://lists.sourceforge.net/lists/listinfo/mifos-users -- Ryan Whitney Mifos Technical Program Manager [email protected] Mifos - Technology that Empowers Microfinance (www.mifos.org) Our mission is to enable the poor, especially the poorest, to create a world without poverty. <http://grameenfoundation.org/take-action/ingenuity-fund-challenge/> P please consider the environment before printing this e-mail.
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