Amortization 360 vs 365 Days

johndrew

Board Regular
Joined
Apr 21, 2007
Messages
100
I have a loan for $755,812 at 6.0% for 5 years. I put this in as pmt and got a montly payment of $14,611.98. The bank has a payment of $14,644.10.

I asked the bank why the difference and they said it was the difference between 360 days vs 365.

How do I calculate it to get their montly payment and make an amortization schedule with interest and principal?

Thanks
 

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Mexcel

New Member
Joined
Sep 3, 2009
Messages
12
Your banks payment is equivalent to an AER of 6.264%. Now I can get pretty close to your banks payment with ((1+6%/360)^(365/12)-1) as monthly interest rate on the outstanding balance. This is of course a rediculous way of calculating interest. A normal APR is also rediculous but in that case it should have been ((1+6%/12)^1-1) for the monthly rate. Banks wil try to explain to you this is absolutely necessary. Except when you loan money to them. Then on your savings account you always get the qouted rate as effective annual rate.
 

Richard Schollar

MrExcel MVP
Joined
Apr 19, 2005
Messages
23,707
Hello John

I can't get the bank's number exactly but this is how I would approach it:

Excel Workbook
ABCDE
1Initial loan755,812.00
2Interest rate6%
3BasisA360
4Term5 years
5Period12 (monthly)
6Type0
7
8To convert A360 to A3656.0833%
9
10PMT on this basis-14,641.27
11
12
13PeriodPaymentInterestCapitalOutstanding
140-755,812.00
15114,641.273,831.5510,809.72-745,002.28
16214,641.273,776.7510,864.52-734,137.76
17314,641.273,721.6710,919.60-723,218.16
18414,641.273,666.3110,974.95-712,243.21
19514,641.273,610.6811,030.59-701,212.62
20614,641.273,554.7611,086.51-690,126.11
21714,641.273,498.5611,142.71-678,983.39
22814,641.273,442.0711,199.20-667,784.19
23914,641.273,385.2911,255.97-656,528.22
241014,641.273,328.2311,313.03-645,215.19
251114,641.273,270.8811,370.39-633,844.80
261214,641.273,213.2411,428.03-622,416.77
271314,641.273,155.3111,485.96-610,930.81
281414,641.273,097.0811,544.19-599,386.62
291514,641.273,038.5611,602.71-587,783.91
301614,641.272,979.7411,661.53-576,122.38
311714,641.272,920.6211,720.65-564,401.73
321814,641.272,861.2011,780.06-552,621.67
331914,641.272,801.4811,839.78-540,781.89
342014,641.272,741.4611,899.80-528,882.08
352114,641.272,681.1411,960.13-516,921.95
362214,641.272,620.5112,020.76-504,901.19
372314,641.272,559.5712,081.70-492,819.49
382414,641.272,498.3212,142.95-480,676.54
392514,641.272,436.7612,204.51-468,472.04
402614,641.272,374.8912,266.38-456,205.66
412714,641.272,312.7112,328.56-443,877.10
422814,641.272,250.2112,391.06-431,486.05
432914,641.272,187.3912,453.87-419,032.17
443014,641.272,124.2612,517.01-406,515.16
453114,641.272,060.8112,580.46-393,934.70
463214,641.271,997.0312,644.24-381,290.46
473314,641.271,932.9312,708.34-368,582.13
483414,641.271,868.5112,772.76-355,809.37
493514,641.271,803.7612,837.51-342,971.85
503614,641.271,738.6812,902.59-330,069.26
513714,641.271,673.2712,968.00-317,101.26
523814,641.271,607.5313,033.74-304,067.52
533914,641.271,541.4513,099.81-290,967.71
544014,641.271,475.0413,166.22-277,801.48
554114,641.271,408.3013,232.97-264,568.51
564214,641.271,341.2213,300.05-251,268.46
574314,641.271,273.7913,367.48-237,900.98
584414,641.271,206.0313,435.24-224,465.74
594514,641.271,137.9213,503.35-210,962.39
604614,641.271,069.4613,571.81-197,390.58
614714,641.271,000.6613,640.61-183,749.98
624814,641.27931.5113,709.76-170,040.22
634914,641.27862.0113,779.26-156,260.96
645014,641.27792.1613,849.11-142,411.85
655114,641.27721.9513,919.32-128,492.53
665214,641.27651.3913,989.88-114,502.64
675314,641.27580.4614,060.80-100,441.84
685414,641.27509.1814,132.08-86,309.76
695514,641.27437.5414,203.73-72,106.03
705614,641.27365.5414,275.73-57,830.30
715714,641.27293.1714,348.10-43,482.20
725814,641.27220.4314,420.84-29,061.36
735914,641.27147.3214,493.94-14,567.42
746014,641.2773.8514,567.420.00
Sheet1
Excel 2003
Cell Formulas
RangeFormula
B8=B2*365/360
B10=PMT(B8/12,B4*B5,B1,0,B6)
B15=-$B$10
E14=-B1
E15=E14+D15
C15=E14*$B$8/12*-1
D15=B15-C15
 

drpoyner

New Member
Joined
Mar 22, 2013
Messages
2
Can you help me with the formulas on a actual/365 (fixed) loan amortization? Thanks. $20,000,000 loan; 3.25% interest rate; 25 year amortization; monthly payments
 

Firefly2012

Well-known Member
Joined
Dec 28, 2011
Messages
3,638
Here you go:

<b>Excel 2010</b><table cellpadding="2.5px" rules="all" style=";background-color: #FFFFFF;border: 1px solid;border-collapse: collapse; border-color: #BBB"><colgroup><col width="25px" style="background-color: #DAE7F5" /><col /><col /></colgroup><thead><tr style=" background-color: #DAE7F5;text-align: center;color: #161120"><th></th><th>A</th><th>B</th></tr></thead><tbody><tr ><td style="color: #161120;text-align: center;">1</td><td style=";">Loan</td><td style="text-align: right;;">$20,000,000</td></tr><tr ><td style="color: #161120;text-align: center;">2</td><td style=";">Rate</td><td style="text-align: right;;">3.25%</td></tr><tr ><td style="color: #161120;text-align: center;">3</td><td style=";">Term</td><td style="text-align: right;;">25</td></tr><tr ><td style="color: #161120;text-align: center;">4</td><td style="text-align: right;;"></td><td style="text-align: right;;"></td></tr><tr ><td style="color: #161120;text-align: center;">5</td><td style=";">PMT</td><td style="text-align: right;;">-$97,463</td></tr></tbody></table><p style="width:3.6em;font-weight:bold;margin:0;padding:0.2em 0.6em 0.2em 0.5em;border: 1px solid #BBB;border-top:none;text-align: center;background-color: #DAE7F5;color: #161120">Sheet1</p><br /><br /><table width="85%" cellpadding="2.5px" rules="all" style=";border: 2px solid black;border-collapse:collapse;padding: 0.4em;background-color: #FFFFFF" ><tr><td style="padding:6px" ><b>Worksheet Formulas</b><table cellpadding="2.5px" width="100%" rules="all" style="border: 1px solid;text-align:center;background-color: #FFFFFF;border-collapse: collapse; border-color: #BBB"><thead><tr style=" background-color: #DAE7F5;color: #161120"><th width="10px">Cell</th><th style="text-align:left;padding-left:5px;">Formula</th></tr></thead><tbody><tr><th width="10px" style=" background-color: #DAE7F5;color: #161120">B5</th><td style="text-align:left">=PMT(<font color="Blue">B2/12,B3*12,B1</font>)</td></tr></tbody></table></td></tr></table><br />
 

drpoyner

New Member
Joined
Mar 22, 2013
Messages
2
Thanks. What is the difference between that formula and one used 30/360? I guess I am struggling with the correct formula to use for the various amortization schedules. I appreciate your help.
 

BadgerRoad

Board Regular
Joined
Dec 2, 2005
Messages
224
Office Version
365, 2010
Platform
Windows
If they are doing an actual day (365 days per year) calculation then it is very possible that they are assuming actual days for each month rather than a month being 1/12 of a year. In that case the interest would be daily and the days between each payment would vary depending upon the number of days in the month. This is a common practice for consumer loans as opposed to mortgages. If that is the case you have to amortize the loan and iterate on the payment rather than solving it in closed form.
 

japes

New Member
Joined
Jun 19, 2014
Messages
3
Can someone help me figure out a mortgage payment formula in excel using the PMT function? I have a $11,000,000 loan, interest rate is 3.99%, amortization is 25 years. The bank is telling me the monthly payment is $58,360.23, but I cannot get the same result using the pmt calculation. Any help is appreciated...
 

BadgerRoad

Board Regular
Joined
Dec 2, 2005
Messages
224
Office Version
365, 2010
Platform
Windows
I get $58,001.33 both with PMT function and with my HP 12C financial calculator.
 

japes

New Member
Joined
Jun 19, 2014
Messages
3
I get $58,001.33 both with PMT function and with my HP 12C financial calculator.
Thanks. I get this as well, but the bank says the payment is $58,360.23. I was hoping someone can show me how they are arriving at that number.
 

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