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https://issues.apache.org/jira/browse/FINERACT-2062?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel&focusedCommentId=17825700#comment-17825700
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Bharath Gowda commented on FINERACT-2062:
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[~adamsaghy] we will not get these scenarios when we use the Interest Method
as "declining balance" as it considers the "repayment calculation period" for
calculation the interest
But for Interest Method as "FLAT" it only considers the interest rate and the
amount. So Even though it looks weird I am not able to think of an alternative
solution for the problem [~kigred.developer] has described.
Just a thought?
Will it help if we add the capability of adding the interest rate per week
instead of using 48 weeks in a year calculation only when the Interest method
is "FLAT"?
> Use 48 weeks in a year when interest rate is per month
> ------------------------------------------------------
>
> Key: FINERACT-2062
> URL: https://issues.apache.org/jira/browse/FINERACT-2062
> Project: Apache Fineract
> Issue Type: Improvement
> Components: Loan
> Affects Versions: 1.9.0
> Reporter: Kigenyi Wilfred
> Priority: Minor
> Fix For: 1.10.0
>
>
> Given that the interest rate period on a loan is monthly and client has
> chosen to make weekly repayments, it makes more sense to assume that there
> are 4 weeks in the month and 12 months in the year which comes to 48 weeks
> rather than assuming the traditional 52 weeks in the year.
> For example if a loan has a flat interest rate of 2% Per month and the
> principal is 1000 and the repayments are weekly, weekly interest is currently
> computed as follows:
> interest per week = (0.02*12*1000)/52 = 4.61538
> it would make more sense if interest per month is computed as follows:
> interest per week = (0.02*12*1000)/48 = 5
>
> In other words there is no need for computing weeks in a year when we are
> dealing with a month. There are 4 weeks in a month and this assumption
> calculates a more reasonable figure as compared to when we compute weeks in
> year.
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