Core Concepts

Dive into the heart of financial calculations with this section of the guide. Here, we unpack several pivotal financial concepts, illustrating how they’re woven into the fabric of Curo Calculator. Explore these essential topics:

• Day Count Conventions: Grasp the significance of how days are counted in financial calculations. Learn about key conventions like 30/360 for standard loan calculations, Actual/Actual for precision over long terms, and Actual/365 for short-term finance. Understand when to apply EU 2023/2225 APR for European consumer credit, and how EAR conventions annualise rates for broader applicability.

• Interest Rates: Delve into the nuances of interest calculations with Nominal Annual Rate (NAR) as the basic yearly rate, Effective Annual Rate (EAR) which accounts for compounding, and Annual Percentage Rate (APR) which includes additional borrowing costs like fees, providing a legal standard for comparing loan costs. Understand how the day count convention you select influences which rate type is used in your calculations.

• Modes: Understand how the timing of payments within a period affects your calculations. Learn to differentiate between In Advance (payments at the start of periods) and In Arrears (payments at the end), and see how consistent or mismatched modes across multiple payment or charge rows influence cash flow patterns.

• Schedules: Explore the Amortisation Schedule for a clear breakdown of loan payments, showing how each instalment reduces principal and pays interest, ideal for financial accounting. Alternatively, the EAR/APR Proof schedule validates the calculated interest rate by ensuring discounted cash flows balance to zero, crucial for rate accuracy verification. Both schedules can be downloaded in XLSX format, with options to view day count factors for deeper analysis.

Embark on this journey through Curo Calculator’s core concepts to enhance your financial acumen and make the most of your calculations.