Daily versus monthly reducing balance: compare the calculation dates
Two reducing-balance loans can use different interest conventions. The payment date, balance-update method and day-count basis can affect the result, so compare the actual calculation rather than assuming identical treatment.
Ask which dates count
Identify whether interest is calculated using daily balances or a periodic method, when repayments are applied and what denominator or convention the agreement uses. Clarify how early payments, holidays and delayed postings are handled. A calculator using equal monthly periods may not reproduce a statement that uses actual dates. Keep the dated repayment schedule when investigating differences.
A worked situation
Using a purely illustrative 12% annual rate and a 365-day convention, interest on ₹1 lakh for 30 days is about ₹986.30. A simple monthly rate of 1% gives ₹1,000. The example demonstrates why conventions need to be stated, not that one result is your contract's charge.
Your next-step checklist
- Record the interest and day-count method
- Match actual receipt and posting dates
- Ask for a worked account-specific calculation
Is the EMI formula enough to audit every statement?
It provides a model under its assumptions. Actual-date interest, fees and posting rules can produce differences that require the lender's calculation method and transaction history.
Official references and further reading
These links help you check current information. A provider-specific page describes that provider’s process; it is not a universal eligibility rule or a claim of partnership.
General educational information, not a personalised credit recommendation. Examples use assumed inputs. Rates, charges, eligibility and documents vary; confirm your own lender’s current written terms.