Automatic loan payment calculation.

[Paul Lussier]

>>>>>> "Paul" == Paul Lussier <pll@mclinux.com> writes:
>
>    Paul> Now, one thing you could do is write a script to
>    Paul> autmagically generate this stuff (the formulae are pretty
>    Paul> standard and well known) and spew the data either in xml
>    Paul> format or qif format and periodically import the data into
>    Paul> gnucash.

>>> On 6 Nov 2001, Roland Roberts, identified below as "roland", spake
>>> forth:

  roland> And since the stupid equation is so well-known, why does
  roland> my payment schedule in Quicken never match the one my bank
  roland> gives me?

  roland> No, I'm not being sarcastic, I really would like to know if
  roland> Quicken is as stupid as I think it is or if there are some
  roland> extra rules the bank uses that I Quicken doesn't know about.

Well, it's not really that Quicken is being stupid or rules the bank 
uses that Quicken doesn't know about.

Someone please correct me if I'm wrong here, as IANAA, and my
understanding for things financial and mathematical is limited :)

I'd gladly place the intest calucation formula here, however I don't 
know it off the top of my head, and I'm to lazy to go find it :)

However, there are essentially 2 ways to compute interest.  There's 
the simple interest calculation and the more complicated interest 
calculation.  

The simple method says, starting with $x, at %y per year, at the end 
of the year you have $x + ($x * %y).

The complicated method says that $x at %y per year is %z per some 
smaller period of time (i.e. daily).  Therefore, you must compute 
this amount each day and add it up to figure out what you'll have at 
the end of the year.

Banks typically use the simple method when they owe you money and the 
complex method when you owe them.  The reason, money!  The complex 
method is more accurate, and means you'll owe them a few cents more.
A few cents here and there among all of it's customers adds up.  It 
also means they owe you less when it comes time you pay you interest 
on your bank accounts.

The reason Quicken's calculations differ is probably because the bank's 
formula is slightly more accurate than the one Quicken uses, which is 
probably relatively simple.

It's been quite some time since I used Quicken, but IIRC, the 
diffence was only a few cents, it wasn't a major difference.

Hope that helps somewhat.
-- 

Seeya,
Paul
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