Statutory interest
Submitted by Donchichio on Thu, 05/08/2010 - 00:03
I have a question with regards to statutory interest which is 8 percent. I am owed a considerable amount of money from a person and he has a vary order stating he should pay me 200 pounds a month. The defendant has been making payments for over a year and I have decided to add the statutory interest accrued for the past year. Do I need to deduct the amount paid to me before adding the interest or is it possible to add interest each month after single payments are recieved? Regards Don
This how I would deal with
This how I would deal with this.
You know the capital amount that is due. Calculate 8% of that sum to give the annual interest figure. Divide that figure by 365 to give you the daily rate.
Work out the number of days the capital has been outstanding up to the time of an instalment payment. Times that number by the daily rate and add it to the capital. This will give you the total amount outstanding when the instalment is paid. Subtract the instalment from the new capital figure to give you the amount still due after payment.
You can then work out a new daily rate on the new sum.
Repeat this method until full payment is made.
just to clarify
can I clarify my situation slightly and explain it in a little more detail I am owed 10000 and the defendant has been paying me 100 pounds a month due to the court order ( the order stated the defendant can only afford to repay such an amount.) the defendent has paid me for exactly one year and now I Have decided to add the statutory interest to the amount owed (plus administration costs which is reasonable my time is consumed during these processes ) In one year I Have been paid back 1200 so the Defendant owes me 8800 pounds. I will divide the 8800 by 100 and multiply by 8 =704 (704 / 365) *365 =704 704 + 8800=9504. Or do I need to work out 8 percents after each monthly payment (10000 -100) * 1.08 for 1st month (10692 - 100) *1.08 for 2nd month (11439.36 -100) * 1.08 for 3rd month This method is what the banks use but the monies paid to me is less than the 8 percent? Or ((((10000 -100)/100)*8)/364)*31 for 1st month which is July 09 67.27 interest ((((9967.27 -100)/100)*8)/364)*31 for 2nd month And so on Regards Don
Don
Unfortunately you cannot add
Unfortunately you cannot add on anything for your time and administration.
As I said I would work it out like this.
£8800.00 is owed. Interest accrues on this at £1.93 per day. Say a month is 31 days. Therefore at the end of the month £8859.83 is due. £100.00 is paid. The debt comes down to £8759.33. You then rework the figures again for the next month until another payment is paid and so on.
This is how I would do it.