July 2, 2013 7:31 pm
What is the most suitable date for paying/crediting EMI amount in a loan account so that the interest charged for that month is MINIMUM?
Here interest is calculated on daily reducing balance.
Dear Vyasang, the interest can not be same for each month in a daily reducing balance loan as the interest ‘ll change for no. of days. So for Feb, it ‘ll be 28 or 29 days, whereas for Jan, Mar, May…. it ‘ll be 31 days & other months 30 days.
Please calculate on your own. The interest for April ‘ll be less than May although May is next month after April & as per your normal understanding, it should be lower interest outgo in May but you had paid higher interest in May 🙂
Set a date and opt for the ECS (Electronic Clearing Service) facility. Also set a date which is 2 -3 before the due date to ensure that are no late payments.
Set a date and opt for ECS (Electronic Clearing Service) facility. Also set a date which is 2 – 3 before the due date to ensure that are no late payments.
Dear V, how an EMI date ‘ll impact your loan repayment in the long run? Please elaborate?
As the interest is calculated on Daily Reducing Balance, I felt that the date of EMI payment is or may affect the amount of interest charged on the remaining loan amount. In my account statement I have seen variation in the amount of interest charged monthly. The interest of each succeeding month should be lower than the previous month (when the EMI is fixed), but this is not the case.
Could you please explain how the amount of interest is arrived at when it is computed on Daily Reducing Balance. What does ‘Daily Reducing balance’ mean?
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