I am working on developing my own loan payments schedule generator and I have a question regarding how fraction cents
For example, this load:
- Principal: $10,000
- Interest: 5% per year
- Period: 48 months
Using the usual payment formula, that give a payment of: $230.29293570646587 (A). I round this amount to the nearest cent which give me $230.29 (B).
The truncated portion of the payment amount accumulate over the payment periods to about $0.14*. How do bank manage that difference? I presume that they aren't willing to leave money on the table and they would recoup the money in some form. How do they proceed?
Let me know if you need more precision.
*(Amount_A - Amount_B)*48 = $0.1409139103616326