Actual/360 Amortization Table
If I use an actual/360 interest payment instead of a simple 30/360 interest payment, will my ending loan balance be $0?
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Actual/360 generates more interest than 30/360. If you are using the PMT formula in excel or you are keeping the same payment that was calculated using simple interest/12, a loan schedule that uses actual/360 interest will not tie out to zero. You would need to use a actual/360 payment calculator to find what the new (slightly higher) payment would be using actual/360 interest.
A fully amortizing loan schedule will end in zero, but you need to match the payment with the interest calculation
Thank you for that explanation. I understand that the payment function is using the 30/360 method because it is an equal payment no matter the number of days in each month. How do I match the payment with the interest calculation? Still confused on that. Thank you.
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