Example 19: Repayment Plan 1: Specific number of instalments

Example 19 Scenario

This example is based on the facts in Example 18. See entire scenario below for full version.

In the previous example:

•	We calculated interest with a view to recovering the total debt as a lump sum.

In this example:

•	Rather than instituting legal proceedings and destroying the prospect of future sales to this customer, we wish to propose a repayment plan that will extinguish the debt in 20 equal instalments.

•	The repayment plan has to take past and ongoing interest into account.

•	The first repayment has to be on 21 September 2007.

•	We require one payment per week.

•	We also want to give the debtor a schedule which clearly sets out what is expected of him, as that increases the likelihood of compliance.

Demonstrated Features

►	How to use the repayment plan tool.

►	How to specify the number of instalments and time interval between each one.

►	Examine relevant parts of the calculation result.

Points of Interest

◆	You can be proactive with delinquent accounts in ways other than instituting legal proceedings.

◆	Interest has often been abandoned because it is too hard to calculate - but now there is no excuse for giving away that money.

◆	The repayment plan takes into account past and ongoing interest so it is not lost.

◆	A detailed and tailor-made repayment plan can be a more satisfactory vehicle for recover than demands for lump sums and litigation.

◆	We have specified the number of instalments to make - this setting can be used to calculate interest and instalments on a normal loan. If you are lending money, then use this tool to calculate the instalment amount, payment dates, and total interest.

Multimedia Presentation

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Entire Scenario

There are a series of transactions on Mr Smith's account - the first one is on 16 July 2004 and the last one is on 23 November 2006, the balance is currently $6704.35.

TX DATE	DUE/AVAIL	DESCRIPTION	AMOUNT	BALANCE	PRINCIPAL	NON-PRN
16/07/2004	30/07/2004	Invoice No. 504	$950.05	$950.05	$950.05	$0.00
24/01/2005	07/02/2005	Invoice No. 505	$1,482.18	$2,432.23	$950.05	$1,482.18
12/10/2005	12/10/2005	Cheque No. 439758	$2,772.83CR	$340.60CR	$340.60CR	$0.00
11/11/2005	11/11/2005	Dishonoured Cheque Fee	$50.00	$290.60CR	$290.60CR	$0.00
05/11/2005	19/11/2005	Invoice No. 506	$1,313.14	$1,022.54	$1,022.54	$0.00
14/01/2006	28/01/2006	Invoice No. 507	$3,071.38	$4,093.92	$4,093.92	$0.00
10/04/2006	10/04/2006	Cheque No. 439759	$2,950.00CR	$1,143.92	$1,143.92	$0.00
26/05/2006	09/06/2006	Invoice No. 508	$7,076.15	$8,220.07	$8,220.07	$0.00
15/07/2006	15/07/2006	Cheque No. 439760	$1,447.98CR	$6,772.09	$6,772.09	$0.00
23/11/2006	23/11/2006	Cheque No. 439761	$67.74CR	$6,704.35	$6,704.35	$0.00

He's given a lot of business over the years and has always paid up eventually, but the account has lost too much control now.

The credit supply agreement says that interest may be charged daily at the prevailing interest rate that the store pays on its own bank overdraft account, uplifted by 10% of whatever the rate is. For example 5% becomes 5.5% (5% x 1.1). The overdraft rates, before uplift, are:

From Rate

4/4/2004 4%

5/5/2005 5%

6/6/2006 6%

7/7/2007 7%

8/8/2008 8%

These rates increase as the balance increases:

Balances Over Additional Rate

$0 0.0%

$2,000 0.2%

$4,000 0.4%

$6,000 0.6%

$8,000 0.8%

The credit supply agreement also says that if the customer's account goes into credit (i.e. the store owes the customer) the store must pay the customer interest at a static rate of 2.5%.

Interest is to be calculated daily.

Interest is not compounded.

Payments are allocated to interest, then principal, then non-principal.

The account has 14 day terms. This means that invoices bear the date of sale, but payment for any items purchased on credit is not actually due for a further 14 days. Therefore interest does not run until after the 14 days has expired.

There is a legal complication with the second transaction on the account ($1482.18). No interest is chargeable on that amount because of a flaw in the credit supply agreement that wasn't fixed until later.

No interest is chargeable on the Dishonoured cheque fee of $50 either - it isn't covered by the agreement at all.

Rather than instituting legal proceedings and destroying the prospect of a future commercial relationship with this customer, we wish to propose a repayment plan that will extinguish the debt in 20 equal instalments.

The repayment plan has to take past and ongoing interest into account and the first repayment has to be on 21 September 2007.

We require regular payments once per week and want to give the debtor a schedule which clearly sets out the date and amount of each payment, as that minimises misunderstandings and increases the likelihood of compliance.

Calculation Results

The results generated by the program are shown below.

Calculation Result

Example 19

SUMMARY

Calculated repayment plan. If the proposed repayment schedule is followed then:

•	The repayment period concludes by 01/02/2008.

•	Total interest will be nine hundred and thirteen dollars and ninety-four cents ($913.94).

►	There is a small balance left over after allowing for equal instalments.

►	If the tolerance setting on the Repayment form was larger than that balance, then the small balance would have been accounted for by reducing the final instalment.

•	The total amount owing as at 01/02/2008 will be negative zero dollars and eleven cents ($0.11CR) comprised of principal of negative zero dollars and eleven cents ($0.11CR) and accumulated interest of zero dollars and zero cents ($0.00).

TRANSACTION HISTORY BEFORE INTEREST IS TAKEN INTO ACCOUNT

TX DATE	DUE/AVAIL	DESCRIPTION	AMOUNT	BALANCE	PRINCIPAL	NON-PRN
16/07/2004	30/07/2004	Invoice No. 504	$950.05	$950.05	$950.05	$0.00
24/01/2005	07/02/2005	Invoice No. 505	$1,482.18	$2,432.23	$950.05	$1,482.18
12/10/2005	12/10/2005	Cheque No. 439758	$2,772.83CR	$340.60CR	$340.60CR	$0.00
11/11/2005	11/11/2005	Dishonoured Cheque Fee	$50.00	$290.60CR	$290.60CR	$0.00
05/11/2005	19/11/2005	Invoice No. 506	$1,313.14	$1,022.54	$1,022.54	$0.00
14/01/2006	28/01/2006	Invoice No. 507	$3,071.38	$4,093.92	$4,093.92	$0.00
10/04/2006	10/04/2006	Cheque No. 439759	$2,950.00CR	$1,143.92	$1,143.92	$0.00
26/05/2006	09/06/2006	Invoice No. 508	$7,076.15	$8,220.07	$8,220.07	$0.00
15/07/2006	15/07/2006	Cheque No. 439760	$1,447.98CR	$6,772.09	$6,772.09	$0.00
23/11/2006	23/11/2006	Cheque No. 439761	$67.74CR	$6,704.35	$6,704.35	$0.00

►	This is the repayment schedule.

►	The first repayment is on 21 Sep 07 as stipulated.

►	There are 20 instalments as stipulated.

►	Program has calculated all the relevant dates, and the regular instalment that takes interest into account.

►	It gives the date, including day of week for best communication.

►	If the tolerance setting on the Repayment form was larger than the end balance of $0.11CR, then the final instalment would have been adjusted by that amount.

REPAYMENT SCHEDULE

No. Date Amount

1 Fri 21 Sep 2007 $380.92

2 Fri 28 Sep 2007 $380.92

3 Fri 5 Oct 2007 $380.92

4 Fri 12 Oct 2007 $380.92

5 Fri 19 Oct 2007 $380.92

6 Fri 26 Oct 2007 $380.92

7 Fri 2 Nov 2007 $380.92

8 Fri 9 Nov 2007 $380.92

9 Fri 16 Nov 2007 $380.92

10 Fri 23 Nov 2007 $380.92

11 Fri 30 Nov 2007 $380.92

12 Fri 7 Dec 2007 $380.92

13 Fri 14 Dec 2007 $380.92

14 Fri 21 Dec 2007 $380.92

15 Fri 28 Dec 2007 $380.92

16 Fri 4 Jan 2008 $380.92

17 Fri 11 Jan 2008 $380.92

18 Fri 18 Jan 2008 $380.92

19 Fri 25 Jan 2008 $380.92

20 Fri 1 Feb 2008 $380.92

Total $7,618.40

►	The table accounts for past transactions and interest.

►	It then calculates and enters the notional payment dates.

►	It calculates interest on that basis.

►	It calculates the exact instalment that will meet the repayment criteria.

INTEREST CALCULATION TABLE

The following shows how the proposed repayments interact

with calculated interest.

TX DATE	DUE/AVAIL	DESCRIPTION	DAYS	AMOUNT	BALANCE	PRINCIPAL	INTEREST	NON-PRINC
(Same)	30/07/2004	Interest rate started at 4.4% on debit balances & 2.5% on credit balances (0.01202186% & 0.0068306% per day).			$950.05DR	$950.05DR	$0.00DR	$0.00DR
(Same)	31/12/2004	Interest (30/07/2004 to 31/12/2004 inclusive) $950.05 × 0.01202186% × 155 days = $17.70.	155	$17.70DR	$967.75DR	$950.05DR	$17.70DR	$0.00DR
(Same)	01/01/2005	Days per year changed to 365. Daily interest rate now 0.01205479% on debit balances & 0.00684932% on credit balances.			$967.75DR	$950.05DR	$17.70DR	$0.00DR
24/01/2005	07/02/2005	Invoice No. 505. The transaction occurred on 24/01/2005 but was not due and payable until 07/02/2005. Entire amount added to non-principal.		$1,482.18DR	$2,449.93DR	$950.05DR	$17.70DR	$1,482.18DR
(Same)	04/05/2005	Interest (01/01/2005 to 04/05/2005 inclusive) $950.05 × 0.01205479% × 124 days = $14.20.	124	$14.20DR	$2,464.13DR	$950.05DR	$31.90DR	$1,482.18DR
(Same)	05/05/2005	Interest rate on debit balances changed to amount-dependent rates (namely 5.5% from $0.00, then 5.72% from $2,000.00, then 5.94% from $4,000.00, then 6.16% from $6,000.00, then 6.38% from $8,000.00) (currently 0.01506849% per day).			$2,464.13DR	$950.05DR	$31.90DR	$1,482.18DR
(Same)	11/10/2005	Interest (05/05/2005 to 11/10/2005 inclusive) $950.05 × 0.01506849% × 160 days = $22.91.	160	$22.91DR	$2,487.04DR	$950.05DR	$54.81DR	$1,482.18DR
(Same)	12/10/2005	Cheque No. 439758. Payment applied partly to interest ($54.81), partly to principal ($1,235.84), and partly to non-principal ($1,482.18).		$2,772.83CR	$285.79CR	$285.79CR	$0.00DR	$0.00DR
(Same)	11/11/2005	Dishonoured Cheque Fee. Entire amount added to principal.		$50.00DR	$235.79CR	$235.79CR	$0.00DR	$0.00DR
(Same)	18/11/2005	Interest (12/10/2005 to 18/11/2005 inclusive) $235.79CR × 0.00684932% × 38 days = $0.61CR.	38	$0.61CR	$236.40CR	$235.79CR	$0.61CR	$0.00DR
05/11/2005	19/11/2005	Invoice No. 506. The transaction occurred on 05/11/2005 but was not due and payable until 19/11/2005. Payment was applied partly to interest ($0.61) and partly to principal ($1,312.53).		$1,313.14DR	$1,076.74DR	$1,076.74DR	$0.00DR	$0.00DR
(Same)	27/01/2006	Interest (19/11/2005 to 27/01/2006 inclusive) $1,076.74 × 0.01506849% × 70 days = $11.36.	70	$11.36DR	$1,088.10DR	$1,076.74DR	$11.36DR	$0.00DR
14/01/2006	28/01/2006	Invoice No. 507. The transaction occurred on 14/01/2006 but was not due and payable until 28/01/2006. Entire amount added to principal.		$3,071.38DR	$4,159.48DR	$4,148.12DR	$11.36DR	$0.00DR
(Same)	09/04/2006	Interest (28/01/2006 to 09/04/2006 inclusive) $4,148.12 × 0.01627397% × 72 days = $48.60.	72	$48.60DR	$4,208.08DR	$4,148.12DR	$59.96DR	$0.00DR
(Same)	10/04/2006	Cheque No. 439759. Payment was applied partly to interest ($59.96) and partly to principal ($2,890.04).		$2,950.00CR	$1,258.08DR	$1,258.08DR	$0.00DR	$0.00DR
(Same)	05/06/2006	Interest (10/04/2006 to 05/06/2006 inclusive) $1,258.08 × 0.01506849% × 57 days = $10.81.	57	$10.81DR	$1,268.89DR	$1,258.08DR	$10.81DR	$0.00DR
(Same)	06/06/2006	Interest rate on debit balances changed to amount-dependent rates (namely 6.6% from $0.00, then 6.82% from $2,000.00, then 7.04% from $4,000.00, then 7.26% from $6,000.00, then 7.48% from $8,000.00) (currently 0.01808219% per day).			$1,268.89DR	$1,258.08DR	$10.81DR	$0.00DR
(Same)	08/06/2006	Interest (06/06/2006 to 08/06/2006 inclusive) $1,258.08 × 0.01808219% × 3 days = $0.68.	3	$0.68DR	$1,269.57DR	$1,258.08DR	$11.49DR	$0.00DR
26/05/2006	09/06/2006	Invoice No. 508. The transaction occurred on 26/05/2006 but was not due and payable until 09/06/2006. Entire amount added to principal.		$7,076.15DR	$8,345.72DR	$8,334.23DR	$11.49DR	$0.00DR
(Same)	14/07/2006	Interest (09/06/2006 to 14/07/2006 inclusive) $8,334.23 × 0.02049315% × 36 days = $61.49.	36	$61.49DR	$8,407.21DR	$8,334.23DR	$72.98DR	$0.00DR
(Same)	15/07/2006	Cheque No. 439760. Payment was applied partly to interest ($72.98) and partly to principal ($1,375.00).		$1,447.98CR	$6,959.23DR	$6,959.23DR	$0.00DR	$0.00DR
(Same)	22/11/2006	Interest (15/07/2006 to 22/11/2006 inclusive) $6,959.23 × 0.01989041% × 131 days = $181.33.	131	$181.33DR	$7,140.56DR	$6,959.23DR	$181.33DR	$0.00DR
(Same)	23/11/2006	Cheque No. 439761. Payment applied entirely to interest.		$67.74CR	$7,072.82DR	$6,959.23DR	$113.59DR	$0.00DR
(Same)	06/07/2007	Interest (23/11/2006 to 06/07/2007 inclusive) $6,959.23 × 0.01989041% × 226 days = $312.83.	226	$312.83DR	$7,385.65DR	$6,959.23DR	$426.42DR	$0.00DR
(Same)	07/07/2007	Interest rate on debit balances changed to amount-dependent rates (namely 7.7% from $0.00, then 7.92% from $2,000.00, then 8.14% from $4,000.00, then 8.36% from $6,000.00, then 8.58% from $8,000.00) (currently 0.02290411% per day).			$7,385.65DR	$6,959.23DR	$426.42DR	$0.00DR
(Same)	20/09/2007	Interest (07/07/2007 to 20/09/2007 inclusive) $6,959.23 × 0.02290411% × 76 days = $121.14.	76	$121.14DR	$7,506.79DR	$6,959.23DR	$547.56DR	$0.00DR
(Same)	21/09/2007	Proposed repayment #1 ($380.92): The payment will be applied entirely to interest ($380.92).		$380.92CR	$7,125.87DR	$6,959.23DR	$166.64DR	$0.00DR
(Same)	27/09/2007	Interest (21/09/2007 to 27/09/2007 inclusive) $6,959.23 × 0.02290411% × 7 days = $11.16.	7	$11.16DR	$7,137.03DR	$6,959.23DR	$177.80DR	$0.00DR
(Same)	28/09/2007	Proposed repayment #2. The payment will be applied partly to principal ($203.12), and partly to interest ($177.80).		$380.92CR	$6,756.11DR	$6,756.11DR	$0.00DR	$0.00DR
(Same)	04/10/2007	Interest (28/09/2007 to 04/10/2007 inclusive) $6,756.11 × 0.02290411% × 7 days = $10.83.	7	$10.83DR	$6,766.94DR	$6,756.11DR	$10.83DR	$0.00DR
(Same)	05/10/2007	Proposed repayment #3. The payment will be applied partly to principal ($370.09), and partly to interest ($10.83).		$380.92CR	$6,386.02DR	$6,386.02DR	$0.00DR	$0.00DR
(Same)	11/10/2007	Interest (05/10/2007 to 11/10/2007 inclusive) $6,386.02 × 0.02290411% × 7 days = $10.24.	7	$10.24DR	$6,396.26DR	$6,386.02DR	$10.24DR	$0.00DR
(Same)	12/10/2007	Proposed repayment #4. The payment will be applied partly to principal ($370.68), and partly to interest ($10.24).		$380.92CR	$6,015.34DR	$6,015.34DR	$0.00DR	$0.00DR
(Same)	18/10/2007	Interest (12/10/2007 to 18/10/2007 inclusive) $6,015.34 × 0.02290411% × 7 days = $9.64.	7	$9.64DR	$6,024.98DR	$6,015.34DR	$9.64DR	$0.00DR
(Same)	19/10/2007	Proposed repayment #5. The payment will be applied partly to principal ($371.28), and partly to interest ($9.64).		$380.92CR	$5,644.06DR	$5,644.06DR	$0.00DR	$0.00DR
(Same)	25/10/2007	Interest (19/10/2007 to 25/10/2007 inclusive) $5,644.06 × 0.02230137% × 7 days = $8.81.	7	$8.81DR	$5,652.87DR	$5,644.06DR	$8.81DR	$0.00DR
(Same)	26/10/2007	Proposed repayment #6. The payment will be applied partly to principal ($372.11), and partly to interest ($8.81).		$380.92CR	$5,271.95DR	$5,271.95DR	$0.00DR	$0.00DR
(Same)	01/11/2007	Interest (26/10/2007 to 01/11/2007 inclusive) $5,271.95 × 0.02230137% × 7 days = $8.23.	7	$8.23DR	$5,280.18DR	$5,271.95DR	$8.23DR	$0.00DR
(Same)	02/11/2007	Proposed repayment #7. The payment will be applied partly to principal ($372.69), and partly to interest ($8.23).		$380.92CR	$4,899.26DR	$4,899.26DR	$0.00DR	$0.00DR
(Same)	08/11/2007	Interest (02/11/2007 to 08/11/2007 inclusive) $4,899.26 × 0.02230137% × 7 days = $7.65.	7	$7.65DR	$4,906.91DR	$4,899.26DR	$7.65DR	$0.00DR
(Same)	09/11/2007	Proposed repayment #8. The payment will be applied partly to principal ($373.27), and partly to interest ($7.65).		$380.92CR	$4,525.99DR	$4,525.99DR	$0.00DR	$0.00DR
(Same)	15/11/2007	Interest (09/11/2007 to 15/11/2007 inclusive) $4,525.99 × 0.02230137% × 7 days = $7.07.	7	$7.07DR	$4,533.06DR	$4,525.99DR	$7.07DR	$0.00DR
(Same)	16/11/2007	Proposed repayment #9. The payment will be applied partly to principal ($373.85), and partly to interest ($7.07).		$380.92CR	$4,152.14DR	$4,152.14DR	$0.00DR	$0.00DR
(Same)	22/11/2007	Interest (16/11/2007 to 22/11/2007 inclusive) $4,152.14 × 0.02230137% × 7 days = $6.48.	7	$6.48DR	$4,158.62DR	$4,152.14DR	$6.48DR	$0.00DR
(Same)	23/11/2007	Proposed repayment #10. The payment will be applied partly to principal ($374.44), and partly to interest ($6.48).		$380.92CR	$3,777.70DR	$3,777.70DR	$0.00DR	$0.00DR
(Same)	29/11/2007	Interest (23/11/2007 to 29/11/2007 inclusive) $3,777.70 × 0.02169863% × 7 days = $5.74.	7	$5.74DR	$3,783.44DR	$3,777.70DR	$5.74DR	$0.00DR
(Same)	30/11/2007	Proposed repayment #11. The payment will be applied partly to principal ($375.18), and partly to interest ($5.74).		$380.92CR	$3,402.52DR	$3,402.52DR	$0.00DR	$0.00DR
(Same)	06/12/2007	Interest (30/11/2007 to 06/12/2007 inclusive) $3,402.52 × 0.02169863% × 7 days = $5.17.	7	$5.17DR	$3,407.69DR	$3,402.52DR	$5.17DR	$0.00DR
(Same)	07/12/2007	Proposed repayment #12. The payment will be applied partly to principal ($375.75), and partly to interest ($5.17).		$380.92CR	$3,026.77DR	$3,026.77DR	$0.00DR	$0.00DR
(Same)	13/12/2007	Interest (07/12/2007 to 13/12/2007 inclusive) $3,026.77 × 0.02169863% × 7 days = $4.60.	7	$4.60DR	$3,031.37DR	$3,026.77DR	$4.60DR	$0.00DR
(Same)	14/12/2007	Proposed repayment #13. The payment will be applied partly to principal ($376.32), and partly to interest ($4.60).		$380.92CR	$2,650.45DR	$2,650.45DR	$0.00DR	$0.00DR
(Same)	20/12/2007	Interest (14/12/2007 to 20/12/2007 inclusive) $2,650.45 × 0.02169863% × 7 days = $4.03.	7	$4.03DR	$2,654.48DR	$2,650.45DR	$4.03DR	$0.00DR
(Same)	21/12/2007	Proposed repayment #14. The payment will be applied partly to principal ($376.89), and partly to interest ($4.03).		$380.92CR	$2,273.56DR	$2,273.56DR	$0.00DR	$0.00DR
(Same)	27/12/2007	Interest (21/12/2007 to 27/12/2007 inclusive) $2,273.56 × 0.02169863% × 7 days = $3.45.	7	$3.45DR	$2,277.01DR	$2,273.56DR	$3.45DR	$0.00DR
(Same)	28/12/2007	Proposed repayment #15. The payment will be applied partly to principal ($377.47), and partly to interest ($3.45).		$380.92CR	$1,896.09DR	$1,896.09DR	$0.00DR	$0.00DR
(Same)	31/12/2007	Interest (28/12/2007 to 31/12/2007 inclusive) $1,896.09 × 0.02109589% × 4 days = $1.60.	4	$1.60DR	$1,897.69DR	$1,896.09DR	$1.60DR	$0.00DR
(Same)	01/01/2008	Days per year changed to 366. Daily interest rate now 0.02103825% on debit balances & 0.0068306% on credit balances.			$1,897.69DR	$1,896.09DR	$1.60DR	$0.00DR
(Same)	03/01/2008	Interest (01/01/2008 to 03/01/2008 inclusive) $1,896.09 × 0.02103825% × 3 days = $1.20.	3	$1.20DR	$1,898.89DR	$1,896.09DR	$2.80DR	$0.00DR
(Same)	04/01/2008	Proposed repayment #16. The payment will be applied partly to principal ($378.12), and partly to interest ($2.80).		$380.92CR	$1,517.97DR	$1,517.97DR	$0.00DR	$0.00DR
(Same)	10/01/2008	Interest (04/01/2008 to 10/01/2008 inclusive) $1,517.97 × 0.02103825% × 7 days = $2.24.	7	$2.24DR	$1,520.21DR	$1,517.97DR	$2.24DR	$0.00DR
(Same)	11/01/2008	Proposed repayment #17. The payment will be applied partly to principal ($378.68), and partly to interest ($2.24).		$380.92CR	$1,139.29DR	$1,139.29DR	$0.00DR	$0.00DR
(Same)	17/01/2008	Interest (11/01/2008 to 17/01/2008 inclusive) $1,139.29 × 0.02103825% × 7 days = $1.68.	7	$1.68DR	$1,140.97DR	$1,139.29DR	$1.68DR	$0.00DR
(Same)	18/01/2008	Proposed repayment #18. The payment will be applied partly to principal ($379.24), and partly to interest ($1.68).		$380.92CR	$760.05DR	$760.05DR	$0.00DR	$0.00DR
(Same)	24/01/2008	Interest (18/01/2008 to 24/01/2008 inclusive) $760.05 × 0.02103825% × 7 days = $1.12.	7	$1.12DR	$761.17DR	$760.05DR	$1.12DR	$0.00DR
(Same)	25/01/2008	Proposed repayment #19. The payment will be applied partly to principal ($379.80), and partly to interest ($1.12).		$380.92CR	$380.25DR	$380.25DR	$0.00DR	$0.00DR
(Same)	31/01/2008	Interest (25/01/2008 to 31/01/2008 inclusive) $380.25 × 0.02103825% × 7 days = $0.56.	7	$0.56DR	$380.81DR	$380.25DR	$0.56DR	$0.00DR
(Same)	01/02/2008	Proposed repayment #20. The payment will be applied partly to principal ($380.36), and partly to interest ($0.56).		$380.92CR	$0.11CR	$0.11CR	$0.00DR	$0.00DR
		Final Balance	1281		$0.11CR	$0.11CR	$0.00DR	$0.00DR

►	The narrative accounts for past transactions and interest.

►	It then calculates and enters the notional payment dates.

►	It calculates interest on that basis.

►	It calculates the exact instalment that will meet the repayment criteria.

NOTIONAL INTEREST CALCULATION

The following describes how the proposed repayments interact

with calculated interest.

►	Calculates the 1.1x uplift on the bracketed interest rates and sets out the initial debit and credit rates.

(a) On 30/07/2004 the opening principal was $950.05, the interest rate on debit balances was amount-dependent rates (namely 4.4% from $0.00, then 4.62% from $2,000.00, then 4.84% from $4,000.00, then 5.06% from $6,000.00, then 5.28% from $8,000.00), the interest rate on credit balances was 2.5% per annum, and the days per year base used to convert the annual interest rates into daily interest rates was 366.

►	Notes the payment application order.

(b) Debits and Credits are each applied to interest then to principal then to non-principal.

►	Accounts for change in days per year at end of this leap year - as that affects the daily rate of interest.

(c) Calculated interest on 31/12/2004 because it was the last day before the days per year base changed (from 366 to 365) on 01/01/2005. Interest on $950.05 (principal) at 4.4% per annum × 155 days (30/07/2004 to 31/12/2004 inclusive) ÷ 366 (days per year) is $17.70, resulting in a new unpaid interest balance of $17.70 ($0.00 plus $17.70).

(d) On 01/01/2005 the days per year base used to convert the annual interest rate into the daily interest rate changed to 365. The daily interest rate is now 0.01205479% on debit balances & 0.00684932% on credit balances.

Accounts for a debit on which no interest is payable

(e) Debit on 07/02/2005: "Invoice No. 505" $1,482.18. The transaction occurred on 24/01/2005 but was not due and payable until 07/02/2005. The entire amount was added to non-principal, leaving a new non-principal balance of $1,482.18 ($0.00 plus $1,482.18).

►	Calculates and clearly narrates an interest calculation step.

(f) Calculated interest on 04/05/2005 because it was the last day before the interest rate changed on 05/05/2005. Interest on $950.05 (principal) at 4.4% per annum × 124 days (01/01/2005 to 04/05/2005 inclusive) ÷ 365 (days per year) is $14.20, resulting in a new unpaid interest balance of $31.90 ($17.70 plus $14.20).

►	Accounts for a general change in interest rates.

(g) On 05/05/2005 the interest rate on debit balances changed to amount-dependent rates (namely 5.5% from $0.00, then 5.72% from $2,000.00, then 5.94% from $4,000.00, then 6.16% from $6,000.00, then 6.38% from $8,000.00).

(h) Calculated interest on 11/10/2005 because it was the last day before the balance of principal changed on 12/10/2005. Interest on $950.05 (principal) at 5.5% per annum × 160 days (05/05/2005 to 11/10/2005 inclusive) ÷ 365 (days per year) is $22.91, resulting in a new unpaid interest balance of $54.81 ($31.90 plus $22.91).

►	Applies a credit payment against three classes of debit, in the correct order, and explains everything.

(i) Credit on 12/10/2005: "Cheque No. 439758" $2,772.83CR. The payment was applied partly to interest ($54.81), partly to principal ($1,235.84), and partly to non-principal ($1,482.18). This left a new unpaid interest balance of $0.00 ($54.81 minus $54.81), a new principal balance of $285.79CR ($950.05 minus $1,235.84), and a new non-principal balance of $0.00 ($1,482.18 minus $1,482.18).

(j) Debit on 11/11/2005: "Dishonoured Cheque Fee" $50.00. The entire amount was added to principal, leaving a new principal balance of $235.79CR ($285.79CR plus $50.00).

(k) Calculated interest on 18/11/2005 because it was the last day before the balance of principal changed on 19/11/2005. Interest on $235.79CR (principal) at 2.5% per annum × 38 days (12/10/2005 to 18/11/2005 inclusive) ÷ 365 (days per year) is $0.61CR, resulting in a new unpaid interest balance of $0.61CR ($0.00 plus $0.61CR).

(l) Debit on 19/11/2005: "Invoice No. 506" $1,313.14. The transaction occurred on 05/11/2005 but was not due and payable until 19/11/2005. The amount was applied partly to interest ($0.61) and partly to principal ($1,312.53) leaving a new unpaid interest balance of $0.00 ($0.61CR plus $0.61) and a new principal balance of $1,076.74 ($235.79CR plus $1,312.53).

(m) Calculated interest on 27/01/2006 because it was the last day before the balance of principal changed on 28/01/2006. Interest on $1,076.74 (principal) at 5.5% per annum × 70 days (19/11/2005 to 27/01/2006 inclusive) ÷ 365 (days per year) is $11.36, resulting in a new unpaid interest balance of $11.36 ($0.00 plus $11.36).

(n) Debit on 28/01/2006: "Invoice No. 507" $3,071.38. The transaction occurred on 14/01/2006 but was not due and payable until 28/01/2006. The entire amount was added to principal, leaving a new principal balance of $4,148.12 ($1,076.74 plus $3,071.38).

(o) Calculated interest on 09/04/2006 because it was the last day before the balance of principal changed on 10/04/2006. Interest on $4,148.12 (principal) at 5.94% per annum × 72 days (28/01/2006 to 09/04/2006 inclusive) ÷ 365 (days per year) is $48.60, resulting in a new unpaid interest balance of $59.96 ($11.36 plus $48.60).

(p) Credit on 10/04/2006: "Cheque No. 439759" $2,950.00CR. The payment was applied partly to interest ($59.96) and partly to principal ($2,890.04) leaving a new unpaid interest balance of $0.00 ($59.96 minus $59.96) and a new principal balance of $1,258.08 ($4,148.12 minus $2,890.04).

(q) Calculated interest on 05/06/2006 because it was the last day before the interest rate changed on 06/06/2006. Interest on $1,258.08 (principal) at 5.5% per annum × 57 days (10/04/2006 to 05/06/2006 inclusive) ÷ 365 (days per year) is $10.81, resulting in a new unpaid interest balance of $10.81 ($0.00 plus $10.81).

(r) On 06/06/2006 the interest rate on debit balances changed to amount-dependent rates (namely 6.6% from $0.00, then 6.82% from $2,000.00, then 7.04% from $4,000.00, then 7.26% from $6,000.00, then 7.48% from $8,000.00).

(s) Calculated interest on 08/06/2006 because it was the last day before the balance of principal changed on 09/06/2006. Interest on $1,258.08 (principal) at 6.6% per annum × 3 days (06/06/2006 to 08/06/2006 inclusive) ÷ 365 (days per year) is $0.68, resulting in a new unpaid interest balance of $11.49 ($10.81 plus $0.68).

(t) Debit on 09/06/2006: "Invoice No. 508" $7,076.15. The transaction occurred on 26/05/2006 but was not due and payable until 09/06/2006. The entire amount was added to principal, leaving a new principal balance of $8,334.23 ($1,258.08 plus $7,076.15).

(u) Calculated interest on 14/07/2006 because it was the last day before the balance of principal changed on 15/07/2006. Interest on $8,334.23 (principal) at 7.48% per annum × 36 days (09/06/2006 to 14/07/2006 inclusive) ÷ 365 (days per year) is $61.49, resulting in a new unpaid interest balance of $72.98 ($11.49 plus $61.49).

(v) Credit on 15/07/2006: "Cheque No. 439760" $1,447.98CR. The payment was applied partly to interest ($72.98) and partly to principal ($1,375.00) leaving a new unpaid interest balance of $0.00 ($72.98 minus $72.98) and a new principal balance of $6,959.23 ($8,334.23 minus $1,375.00).

(w) Calculated interest on 22/11/2006 because it was the last day before the balance of principal changed on 23/11/2006. Interest on $6,959.23 (principal) at 7.26% per annum × 131 days (15/07/2006 to 22/11/2006 inclusive) ÷ 365 (days per year) is $181.33, resulting in a new unpaid interest balance of $181.33 ($0.00 plus $181.33).

(x) Credit on 23/11/2006: "Cheque No. 439761" $67.74CR. The payment was applied entirely to interest, leaving a new unpaid interest balance of $113.59 ($181.33 minus $67.74).

(y) Calculated interest on 06/07/2007 because it was the last day before the interest rate changed on 07/07/2007. Interest on $6,959.23 (principal) at 7.26% per annum × 226 days (23/11/2006 to 06/07/2007 inclusive) ÷ 365 (days per year) is $312.83, resulting in a new unpaid interest balance of $426.42 ($113.59 plus $312.83).

(z) On 07/07/2007 the interest rate on debit balances changed to amount-dependent rates (namely 7.7% from $0.00, then 7.92% from $2,000.00, then 8.14% from $4,000.00, then 8.36% from $6,000.00, then 8.58% from $8,000.00).

(aa) Calculated interest on 20/09/2007 because it was the last day before the balance of principal changed on 21/09/2007. Interest on $6,959.23 (principal) at 8.36% per annum × 76 days (07/07/2007 to 20/09/2007 inclusive) ÷ 365 (days per year) is $121.14, resulting in a new unpaid interest balance of $547.56 ($426.42 plus $121.14).

►	Here is the first notional repayment. The program enters each one, and numbers it for your convenience.

(ab) Proposed repayment #1 ($380.92) on 21/09/2007: The payment will be applied entirely to interest ($380.92) leaving a new unpaid interest balance of $166.64 ($547.56 minus $380.92).

►	Narration accounts for interest left in wake of the first repayment.

(ac) Calculated interest on 27/09/2007 because it was the last day before the balance of principal changed on 28/09/2007. Interest on $6,959.23 (principal) at 8.36% per annum × 7 days (21/09/2007 to 27/09/2007 inclusive) ÷ 365 (days per year) is $11.16, resulting in a new unpaid interest balance of $177.80 ($166.64 plus $11.16).

►	Here is the next notional repayment.

(ad) Proposed repayment #2 ($380.92) on 28/09/2007: The payment will be applied partly to principal ($203.12), and partly to interest ($177.80) leaving a new principal balance of $6,756.11 ($6,959.23 minus $203.12), and a new unpaid interest balance of $0.00 ($177.80 minus $177.80).

(ae) Calculated interest on 04/10/2007 because it was the last day before the balance of principal changed on 05/10/2007. Interest on $6,756.11 (principal) at 8.36% per annum × 7 days (28/09/2007 to 04/10/2007 inclusive) ÷ 365 (days per year) is $10.83, resulting in a new unpaid interest balance of $10.83 ($0.00 plus $10.83).

(af) Proposed repayment #3 ($380.92) on 05/10/2007: The payment will be applied partly to principal ($370.09), and partly to interest ($10.83) leaving a new principal balance of $6,386.02 ($6,756.11 minus $370.09), and a new unpaid interest balance of $0.00 ($10.83 minus $10.83).

(ag) Calculated interest on 11/10/2007 because it was the last day before the balance of principal changed on 12/10/2007. Interest on $6,386.02 (principal) at 8.36% per annum × 7 days (05/10/2007 to 11/10/2007 inclusive) ÷ 365 (days per year) is $10.24, resulting in a new unpaid interest balance of $10.24 ($0.00 plus $10.24).

(ah) Proposed repayment #4 ($380.92) on 12/10/2007: The payment will be applied partly to principal ($370.68), and partly to interest ($10.24) leaving a new principal balance of $6,015.34 ($6,386.02 minus $370.68), and a new unpaid interest balance of $0.00 ($10.24 minus $10.24).

(ai) Calculated interest on 18/10/2007 because it was the last day before the balance of principal changed on 19/10/2007. Interest on $6,015.34 (principal) at 8.36% per annum × 7 days (12/10/2007 to 18/10/2007 inclusive) ÷ 365 (days per year) is $9.64, resulting in a new unpaid interest balance of $9.64 ($0.00 plus $9.64).

(aj) Proposed repayment #5 ($380.92) on 19/10/2007: The payment will be applied partly to principal ($371.28), and partly to interest ($9.64) leaving a new principal balance of $5,644.06 ($6,015.34 minus $371.28), and a new unpaid interest balance of $0.00 ($9.64 minus $9.64).

(ak) Calculated interest on 25/10/2007 because it was the last day before the balance of principal changed on 26/10/2007. Interest on $5,644.06 (principal) at 8.14% per annum × 7 days (19/10/2007 to 25/10/2007 inclusive) ÷ 365 (days per year) is $8.81, resulting in a new unpaid interest balance of $8.81 ($0.00 plus $8.81).

(al) Proposed repayment #6 ($380.92) on 26/10/2007: The payment will be applied partly to principal ($372.11), and partly to interest ($8.81) leaving a new principal balance of $5,271.95 ($5,644.06 minus $372.11), and a new unpaid interest balance of $0.00 ($8.81 minus $8.81).

(am) Calculated interest on 01/11/2007 because it was the last day before the balance of principal changed on 02/11/2007. Interest on $5,271.95 (principal) at 8.14% per annum × 7 days (26/10/2007 to 01/11/2007 inclusive) ÷ 365 (days per year) is $8.23, resulting in a new unpaid interest balance of $8.23 ($0.00 plus $8.23).

(an) Proposed repayment #7 ($380.92) on 02/11/2007: The payment will be applied partly to principal ($372.69), and partly to interest ($8.23) leaving a new principal balance of $4,899.26 ($5,271.95 minus $372.69), and a new unpaid interest balance of $0.00 ($8.23 minus $8.23).

(ao) Calculated interest on 08/11/2007 because it was the last day before the balance of principal changed on 09/11/2007. Interest on $4,899.26 (principal) at 8.14% per annum × 7 days (02/11/2007 to 08/11/2007 inclusive) ÷ 365 (days per year) is $7.65, resulting in a new unpaid interest balance of $7.65 ($0.00 plus $7.65).

(ap) Proposed repayment #8 ($380.92) on 09/11/2007: The payment will be applied partly to principal ($373.27), and partly to interest ($7.65) leaving a new principal balance of $4,525.99 ($4,899.26 minus $373.27), and a new unpaid interest balance of $0.00 ($7.65 minus $7.65).

(aq) Calculated interest on 15/11/2007 because it was the last day before the balance of principal changed on 16/11/2007. Interest on $4,525.99 (principal) at 8.14% per annum × 7 days (09/11/2007 to 15/11/2007 inclusive) ÷ 365 (days per year) is $7.07, resulting in a new unpaid interest balance of $7.07 ($0.00 plus $7.07).

(ar) Proposed repayment #9 ($380.92) on 16/11/2007: The payment will be applied partly to principal ($373.85), and partly to interest ($7.07) leaving a new principal balance of $4,152.14 ($4,525.99 minus $373.85), and a new unpaid interest balance of $0.00 ($7.07 minus $7.07).

(as) Calculated interest on 22/11/2007 because it was the last day before the balance of principal changed on 23/11/2007. Interest on $4,152.14 (principal) at 8.14% per annum × 7 days (16/11/2007 to 22/11/2007 inclusive) ÷ 365 (days per year) is $6.48, resulting in a new unpaid interest balance of $6.48 ($0.00 plus $6.48).

(at) Proposed repayment #10 ($380.92) on 23/11/2007: The payment will be applied partly to principal ($374.44), and partly to interest ($6.48) leaving a new principal balance of $3,777.70 ($4,152.14 minus $374.44), and a new unpaid interest balance of $0.00 ($6.48 minus $6.48).

(au) Calculated interest on 29/11/2007 because it was the last day before the balance of principal changed on 30/11/2007. Interest on $3,777.70 (principal) at 7.92% per annum × 7 days (23/11/2007 to 29/11/2007 inclusive) ÷ 365 (days per year) is $5.74, resulting in a new unpaid interest balance of $5.74 ($0.00 plus $5.74).

(av) Proposed repayment #11 ($380.92) on 30/11/2007: The payment will be applied partly to principal ($375.18), and partly to interest ($5.74) leaving a new principal balance of $3,402.52 ($3,777.70 minus $375.18), and a new unpaid interest balance of $0.00 ($5.74 minus $5.74).

(aw) Calculated interest on 06/12/2007 because it was the last day before the balance of principal changed on 07/12/2007. Interest on $3,402.52 (principal) at 7.92% per annum × 7 days (30/11/2007 to 06/12/2007 inclusive) ÷ 365 (days per year) is $5.17, resulting in a new unpaid interest balance of $5.17 ($0.00 plus $5.17).

(ax) Proposed repayment #12 ($380.92) on 07/12/2007: The payment will be applied partly to principal ($375.75), and partly to interest ($5.17) leaving a new principal balance of $3,026.77 ($3,402.52 minus $375.75), and a new unpaid interest balance of $0.00 ($5.17 minus $5.17).

(ay) Calculated interest on 13/12/2007 because it was the last day before the balance of principal changed on 14/12/2007. Interest on $3,026.77 (principal) at 7.92% per annum × 7 days (07/12/2007 to 13/12/2007 inclusive) ÷ 365 (days per year) is $4.60, resulting in a new unpaid interest balance of $4.60 ($0.00 plus $4.60).

(az) Proposed repayment #13 ($380.92) on 14/12/2007: The payment will be applied partly to principal ($376.32), and partly to interest ($4.60) leaving a new principal balance of $2,650.45 ($3,026.77 minus $376.32), and a new unpaid interest balance of $0.00 ($4.60 minus $4.60).

(ba) Calculated interest on 20/12/2007 because it was the last day before the balance of principal changed on 21/12/2007. Interest on $2,650.45 (principal) at 7.92% per annum × 7 days (14/12/2007 to 20/12/2007 inclusive) ÷ 365 (days per year) is $4.03, resulting in a new unpaid interest balance of $4.03 ($0.00 plus $4.03).

(bb) Proposed repayment #14 ($380.92) on 21/12/2007: The payment will be applied partly to principal ($376.89), and partly to interest ($4.03) leaving a new principal balance of $2,273.56 ($2,650.45 minus $376.89), and a new unpaid interest balance of $0.00 ($4.03 minus $4.03).

(bc) Calculated interest on 27/12/2007 because it was the last day before the balance of principal changed on 28/12/2007. Interest on $2,273.56 (principal) at 7.92% per annum × 7 days (21/12/2007 to 27/12/2007 inclusive) ÷ 365 (days per year) is $3.45, resulting in a new unpaid interest balance of $3.45 ($0.00 plus $3.45).

(bd) Proposed repayment #15 ($380.92) on 28/12/2007: The payment will be applied partly to principal ($377.47), and partly to interest ($3.45) leaving a new principal balance of $1,896.09 ($2,273.56 minus $377.47), and a new unpaid interest balance of $0.00 ($3.45 minus $3.45).

(be) Calculated interest on 31/12/2007 because it was the last day before the days per year base changed (from 365 to 366) on 01/01/2008. Interest on $1,896.09 (principal) at 7.7% per annum × 4 days (28/12/2007 to 31/12/2007 inclusive) ÷ 365 (days per year) is $1.60, resulting in a new unpaid interest balance of $1.60 ($0.00 plus $1.60).

(bf) On 01/01/2008 the days per year base used to convert the annual interest rate into the daily interest rate changed to 366. The daily interest rate is now 0.02103825% on debit balances & 0.0068306% on credit balances.

(bg) Calculated interest on 03/01/2008 because it was the last day before the balance of principal changed on 04/01/2008. Interest on $1,896.09 (principal) at 7.7% per annum × 3 days (01/01/2008 to 03/01/2008 inclusive) ÷ 366 (days per year) is $1.20, resulting in a new unpaid interest balance of $2.80 ($1.60 plus $1.20).

(bh) Proposed repayment #16 ($380.92) on 04/01/2008: The payment will be applied partly to principal ($378.12), and partly to interest ($2.80) leaving a new principal balance of $1,517.97 ($1,896.09 minus $378.12), and a new unpaid interest balance of $0.00 ($2.80 minus $2.80).

(bi) Calculated interest on 10/01/2008 because it was the last day before the balance of principal changed on 11/01/2008. Interest on $1,517.97 (principal) at 7.7% per annum × 7 days (04/01/2008 to 10/01/2008 inclusive) ÷ 366 (days per year) is $2.24, resulting in a new unpaid interest balance of $2.24 ($0.00 plus $2.24).

(bj) Proposed repayment #17 ($380.92) on 11/01/2008: The payment will be applied partly to principal ($378.68), and partly to interest ($2.24) leaving a new principal balance of $1,139.29 ($1,517.97 minus $378.68), and a new unpaid interest balance of $0.00 ($2.24 minus $2.24).

(bk) Calculated interest on 17/01/2008 because it was the last day before the balance of principal changed on 18/01/2008. Interest on $1,139.29 (principal) at 7.7% per annum × 7 days (11/01/2008 to 17/01/2008 inclusive) ÷ 366 (days per year) is $1.68, resulting in a new unpaid interest balance of $1.68 ($0.00 plus $1.68).

(bl) Proposed repayment #18 ($380.92) on 18/01/2008: The payment will be applied partly to principal ($379.24), and partly to interest ($1.68) leaving a new principal balance of $760.05 ($1,139.29 minus $379.24), and a new unpaid interest balance of $0.00 ($1.68 minus $1.68).

(bm) Calculated interest on 24/01/2008 because it was the last day before the balance of principal changed on 25/01/2008. Interest on $760.05 (principal) at 7.7% per annum × 7 days (18/01/2008 to 24/01/2008 inclusive) ÷ 366 (days per year) is $1.12, resulting in a new unpaid interest balance of $1.12 ($0.00 plus $1.12).

(bn) Proposed repayment #19 ($380.92) on 25/01/2008: The payment will be applied partly to principal ($379.80), and partly to interest ($1.12) leaving a new principal balance of $380.25 ($760.05 minus $379.80), and a new unpaid interest balance of $0.00 ($1.12 minus $1.12).

(bo) Calculated interest on 31/01/2008 because it was the last day before the balance of principal changed on 01/02/2008. Interest on $380.25 (principal) at 7.7% per annum × 7 days (25/01/2008 to 31/01/2008 inclusive) ÷ 366 (days per year) is $0.56, resulting in a new unpaid interest balance of $0.56 ($0.00 plus $0.56).

(bp) Proposed repayment #20 ($380.92) on 01/02/2008: The payment will be applied partly to principal ($380.36), and partly to interest ($0.56) leaving a new principal balance of $0.11CR ($380.25 minus $380.36), and a new unpaid interest balance of $0.00 ($0.56 minus $0.56).

(bq) Total amount owing as at 01/02/2008 will be $0.11CR comprising principal $0.11CR plus accumulated interest $0.00.

(br) Interest on $0.11CR will continue to accumulate at negative zero dollars and zero cents ($0.00) per day.

►	This report is a convenient schedule that you can use to send the debtor.

►	Alternatively all the field values have been output to a merge data file so you can merge the data with your own wordprocessing precedents.

DEFERRAL OF LEGAL ACTION - AGREED REPAYMENT SCHEDULE

Deferral of legal action has been agreed on the condition that you strictly comply with the following repayment plan.

If you don't strictly comply with this plan then legal action can be instituted against you without further notice. Proceedings can be for recovery of the total liability (including interest and costs), or some lesser amount - for example the amount of any overdue instalment(s).

Please keep this timetable in a prominent place and ensure that each payment is made by the specified date and in the designated amount.

Please note that the repayment amounts take into account ongoing interest, and credit for each payment received. We will provide full details of that calculation if requested.