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#1580100 - 07/19/11 09:27 PM 360/365 vs 365/365
Flippy Offline
Junior Member
Joined: May 2011
Posts: 44
OKC
I work for a Credit Union who is just starting up their Com'l Lending Department. They currently are doing all loans at 365/365 and I say they should be done at 360/365 (Com'l Loans). Can someone clear up the difference or give me the definition or how to calculate each in laymans terms?

Thanks in advance!!

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#1580117 - 07/19/11 09:38 PM Re: 360/365 vs 365/365 Flippy
Cowboys Fan Offline
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Joined: Dec 2002
Posts: 4,615
SC
There's no federal requirement to use 360 for commercial loans (but check state laws and CU rules).
Principal x rate x number of days / 365 (or 360) = interest (if you use 1 as the number of days you have the per diem).
360 accrual method has a shorter year so the bank makes more income.
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#1580119 - 07/19/11 09:41 PM Re: 360/365 vs 365/365 Cowboys Fan
Flippy Offline
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Joined: May 2011
Posts: 44
OKC
Thank You!!

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#1580120 - 07/19/11 09:43 PM Re: 360/365 vs 365/365 Cowboys Fan
ktac MITCH Offline
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ktac MITCH
Joined: May 2005
Posts: 1,813
Giant side of TX
As Cowboy said - this is a state law issue.
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#1580124 - 07/19/11 09:47 PM Re: 360/365 vs 365/365 ktac MITCH
Flippy Offline
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Joined: May 2011
Posts: 44
OKC
Ok, can you point me in the direction of where one might find the "state law" on this?

Thanks!!

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#1580125 - 07/19/11 09:50 PM Re: 360/365 vs 365/365 ktac MITCH
MyBrainHurts Offline
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Joined: Feb 2010
Posts: 960
Illinois
Do you mean using 365/360 for commercial? Research this in your state, as it has been a cause for class action suits.

I've never heard of anyone using 360/365, as it would decrease bank income.
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#1580133 - 07/19/11 10:03 PM Re: 360/365 vs 365/365 MyBrainHurts
Cowboys Fan Offline
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SC
I was assuming it was typo and they're talking about actual/360 - good catch.
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#1580145 - 07/19/11 10:52 PM Re: 360/365 vs 365/365 Flippy
Richard Insley Online
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Richard Insley
Joined: Oct 2000
Posts: 10,179
Toano, VA
Originally Posted By: Flippy
where one might find the "state law" on this?

Contact your legal counsel.
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