Interest Calculation Methods

I decided to have a bit of a read of the gripping saga put together by those oh so in touch with reality people in Canberra called the NCCP act. More specifically I was looking for the recommended calculation method we should use when charging our clients interest.

Funny thing is, I could not find any reference to this anywhere. Even though there is talk about different methods of required calculation in the analls of cyberspace – the NCCP act doesn’t tell us how to do it. Surprising really as it tells us lots of stuff we can and cannot do….

So, when your looking at setting up your Credit Contract be aware that you can use any form of calculation method you want, as long as it is disclosed to the client prior to them signing the credit contract that is. I would also recommend explaining it to them as well so they know what they are paying and how late and early payments will effect their loan with you

It is common practice for contracts to charge interest daily and compound it daily. Property loans from banks tend to charge interest daily and compound monthly. If the government is going to charge you interest they do it as  charge and compound daily.


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