Interest Application (definition)

In LoanPro, the interest that a payment will apply to can be calculated in one of two ways.  It can either be the total interest that will accrue in a payment period (between periods), or it will be the amount of interest that accrued since the last payment was made (between transactions).  It may seem like these two concepts are the same, but they will only be similar if customers make payments on the correct due dates in the correct amounts.  If a borrower pays early with a between periods interest application for example, all the interest from the payment period will still be due.  In the same scenario, but with a between transactions interest application, less interest will be due because only the interest accrued since the last payment will be due.


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