How to calculate daily interest?

SnowMan

cr0fty wrote: »

The thing is though that she actually has the money. She gets housing benefits and it has been confirmed to me by the benefits association that the payments to her have been made. She just isn't paying the money

It may be that the tenant's expenditure exceeds her income and so she is using the housing benefit money to cover that shortfall. Or she may have other debts and is using the housing benefit money to pay those off. She may be intending to do a moonlight flit at a later date and so isn't paying rent in the meantime.

So the obvious thing is to make further attempts to find out from the tenant why rent hasn't been paid.

You can then decide what action to take either to get the rent paid or to seek possession.

richbeth

cr0fty wrote: »

Haha so it is.

What exactly is compound interest? The tenancy agreement is worded like so

"The landlord reserves the right to charge interest (calculated from day to day) at 3% over the Bank of England base rate on late payments and the landlord may recover the interest as though it were rent."

To answer the maths question
This is saying that you can charge 3% +base rate (0.5%) = 3.5% pa on a daily basis
so each day would be 3.5/365 = 0.00959% interest
so 1 days interest on £50 would be 50*0.00959/100

I find the best way to calculate these kind of things is by using the FV function in Excel (or whatever spreadsheet you're using, they'll all have something similar).

In excel you'd use

=FV(3.5/100/365,30,0,-50)
The first value is the daily interest 3.5/100/365
The second the number of days (30 in this case)
The third the payment - in this case zero as no-one is paying off the debt
The final one is the amount owed (£50)

You'll see that at 3.5 % a thousand pound debt will only generate ca £2.90 of interest.

Richard