To calculate accrued interest, we use the
Initial Loan Value (USD),
Accrual Method and
Transaction Time fields that are filled in at loan submission. As a reminder:
Initial Loan Value (USD)is the initial value of the loan in USD, which is the Loan Quantity multiplied by the conversion price of Loan Asset / USD that the Lender and Borrower agree to. Example: $1,000,000.
Loan Rateis the annualized rate of interest to be applied to the value of the loan, to be paid by the borrower to the lender. Example: 5%.
Accrual Methodis the method by which interest is calculated. Currently Actual/365 and Actual/360 are supported.
Transaction Timeis the date and time that the loan was executed. Example: April 1, 2020 at 4pm CST.
Accrued Interest is therefore a simple calculation that uses the following structure:
Accrued Interest =
Initial Loan Value (USD) x (
Accrual Method:Days) x (Now -
- Initial Loan Value: $1,000,000
- Loan Rate: 5%
- Accrual Method: Actual/360
- Transaction Time: April 1, 2020 at 4pm CST
- Now: April 16, 2020 at 4pm CST
Accrued Interest = $1,000,000 x (5% / 360) x (April 16, 2020 at 4pm CST - April 1, 2020 at 4pm CST)
Accrued Interest = $2,083.33