Interest can be calculated in one of two ways: Simple/Fixed Interest or Daily Accrual (Actual 365).
Simple Interest (Fixed)
Simple interest calculates interest based on the scheduled payment frequency.
Payments follow the amortization schedule, and on-time payments will match the schedule exactly.
Early or late payments do not change the scheduled principal and interest amounts, though late fees may apply separately and are not included in the amortization schedule.
This option is best if you want:
- Predictable, consistent payments
- An amortization schedule that remains fixed over time
Daily Interest (Actual 365)
Daily interest accrues based on the exact number of days between payments (365-day year).
The
amortization schedule is a projection, and actual interest and principal amounts may vary due to month length or payment timing,
even when payments are made on the due date.
This option is best if you want:
- Interest to reflect actual day-by-day timing
- Flexibility for early, late, or irregular payments