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Specific examples of addition of interest to principal

Ex If 20,000 yen is borrowed on July 27, and there is no additional borrowing when the repayment is due on the repayment date August 27.

  • 1

    First, the addition of interest to principal is calculated. The incurred interest is: 20,000 yen × 15% × 31 days / 365 days ≈ 254 yen.
    254 yen is added into the outstanding borrowing amount. After the addition of interest to principal, the outstanding borrowing amount becomes 20,000 yen + 254 yen = 20,254 yen.

  • 2

    After the addition of interest to principal, automatic payment of the monthly repayment amount (5,000 yen) is made from the Seven Bank Account (ordinary deposit). After the monthly repayment, the outstanding borrowing amount becomes 20,254 yen – 5,000 yen = 15,254 yen.

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