Interest Accrual Methods (Bryt's Math Calculations)

Bryt has different interest accrual method options for you to match your preferred interest dues over the life of a loan.  It is important to understand these accrual methods, their differences, and how each is calculated - so this guide will help with that. 

Breakdown of Bryt's Interest Accrual Options

While Bryt can be configured for standard accrual methods (Periodic 30/360, Actual/365, Actual/360) we have built in the ability to perform variations of the standard methods by using different combinations of: 
1) Payment Frequency, 
2) Interest Day-Count, and 
3) Per Diem

1) Payment Frequency determines the regularity of a loan's dues. 
Payment Frequency options in Bryt are:

• Monthly – payment occurs every month on a specific date
• Quarterly – payment occurs every three months on a specific date
• Twice monthly – payment occurs two times per month on specific dates
• Weekly – payment occurs every week on a specific day
• Every other week - payment occurs every other week on a specific day
• Annually – payment occurs once a year on a specific date
• Single Pay Period - Payment will occur once on a specified future date

2) Interest Day-Count is how we calculate the number of days between two payment dates.  
The following settings are available for Interest Day-Count: 

• Periodic (Even 30-Day Pay Periods) – uses the same number for each period, even though the periods may vary.  

Example: Months are always counted as 30 days, regardless of the actual number of days in the month

• Actual Days (365) - counts the actual days in the pay period.

Example: Days of the month might be 28, 29, 30, or 31 days

3) Per Diem (or Daily Interest) is the interest charged on a loan daily.  
This term is also referred to as the Daily Accrual.  We use Per Diem (or Daily Interest) to calculate prorated payments as well as the interest due for a specific Payment Frequency.  The following settings are available for Per Diem (or Daily Interest): 

• 360 divides the Annual Interest rate by 360 to get the Per Diem (or Daily Interest) rate - 
  Many commercial and residential loans use this method to calculate the Per Diem rate as it produces a slightly higher daily rate. Combining this Per Diem calculation with the Actual Days (365) Interest Day-Count produces the most interest for your loan. 
• 364 divides the Annual Interest rate by 364 to get the Per Diem (or Daily Interest) rate - 
  This method is generally only used for Weekly or Every other week Payment Frequencies.
• 365 divides the Annual Interest rate by 365 to get the Per Diem (or Daily Interest) rate                

Accrual Combinations and Effective Interest Rate Results
The following is a list of the most common accrual methods:

• Periodic/360 is commonly used in consumer transactions (like mortgages, otherwise Actual Day loans don't amortize evenly) or commercial transactions. We favor Periodic/360 loans because they will save you time and money, despite alternative options attempting to maximize profits. 

• Actual Days/360 (365/360) is commonly used in commercial transactions. Many lenders favor this method because it returns a slightly higher effective interest rate.

• Actual Days/365 (365/365) is commonly used in commercial transactions.
       Note: Only Actual/365 will provide an additional option to factor in an extra day for 'leap years' (For Monthly payment frequency loans). Submit a request to support@brytsoftware.com if you'd like this option for Actual/360. 

The following chart describes how to configure Bryt for these common accrual methods.  It also shows the difference in effective interest rates for these configurations.