Overview

The Interest Calculation Basis on the NetLoan Type record determines which balance interest is calculated on and whether interest accrues daily throughout each period or once at period end. It works alongside the loan's Day Count Convention, which controls how days and years are counted when computing the rate. This setting was introduced for all loan types in NetLoan 2026.1.6.0. All loans created from a loan type inherit its Interest Calculation Basis.

Setup Options

Interest Calculation Basis

Field type: List/Record · Field ID: custrecord_da_type_interest_basis

Determines the balance interest is calculated on and when interest accrues on the amortization schedule. If left blank, dynamic installment loan types with a Revolving Credit Limit Type and a Minimum Payment Calculation Method default to Average Daily Balance Not Including Charges – Monthly. All other loan types default to Average Daily Balance.

Available methods:

• Average Daily Balance (default): accrues interest on the daily balance throughout the period.
• Average Daily Balance – Monthly: accrues interest only at period end, on the days-weighted average balance over the period. No interest is posted mid-period.
• Average Daily Balance Not Including Charges – Monthly: the same as Average Daily Balance – Monthly, except new charges added during the period are excluded from the average. Only available on dynamic installment loan types with a Revolving Credit Limit Type and a Minimum Payment Calculation Method.
• Ending Balance – Monthly: accrues interest only at period end, on the loan balance at the end of the period. No interest is posted mid-period.
• Credit Limit: accrues interest on the loan's credit limit rather than its balance.

Credit Limit Type

Field type: List/Record · Field ID: custrecord_da_type_credit_limit_type

On dynamic installment loan types, setting this to Revolving together with a Minimum Payment Calculation Method produces revolving line-of-credit behavior. Must be Revolving to use Average Daily Balance Not Including Charges – Monthly.

Minimum Payment Calculation Method

Field type: List/Record · Field ID: custrecord_da_type_min_payment_calc

The calculation method used to determine the minimum payment for the period. Required when using Average Daily Balance Not Including Charges – Monthly.

How each method impacts the amortization schedule

• Average Daily Balance accrues interest on every schedule line as the balance moves. Each draw, payment, or charge changes accrual from that day forward, and interest appears continuously through the period.
• The three Monthly methods (Average Daily Balance – Monthly, Average Daily Balance Not Including Charges – Monthly, Ending Balance – Monthly) post interest once at period end on the period balance. The schedule shows no mid-period interest activity. For the average-balance methods, the schedule audit shows the full sum-of-balances breakdown used to compute the average.
• Credit Limit accrues interest on the full credit limit even when the drawn balance is lower.
• The Day Count Convention determines the daily or period rate applied to the selected balance in every method.

Availability by loan type

• Non-revolving (fixed installment and dynamic installment) loan types can use Average Daily Balance, Average Daily Balance – Monthly, Ending Balance – Monthly, and Credit Limit.
• Average Daily Balance Not Including Charges – Monthly requires a dynamic installment loan type with Credit Limit Type = Revolving and a Minimum Payment Calculation Method. It is not available on dynamic installment loans that have minimum payments but a Non-Revolving Credit Limit Type.

Use Case Specific Setup

Use Case: Standard Amortizing Term Loan

For fixed installment loans where interest should follow the actual daily balance:

• Interest Calculation Basis: Average Daily Balance (or leave blank; this is the default)

Interest accrues on each schedule line as payments reduce the balance, so early payoffs and extra payments immediately reduce interest.

Use Case: Line of Credit Accrued and Billed Monthly

For loan types where interest is accrued and billed once per period on the average outstanding balance. These are commonly dynamic installment loan types with a Revolving Credit Limit Type, though a Revolving Credit Limit Type is not required:

• Credit Limit Type: Revolving (common, but not required)
• Interest Calculation Basis: Average Daily Balance – Monthly

Draws and paydowns during the period are weighted by days outstanding, and a single interest amount accrues and posts at period end. The schedule audit shows the sum-of-balances breakdown used to compute the average.

Use Case: Revolving Product with Minimum Payments

For consumer-style and credit card style products where borrowers pay a calculated minimum each period and new charges get a grace period before accruing interest. Some product offerings refer to charges as draws:

• Credit Limit Type: Revolving
• Minimum Payment Calculation Method: select a method (e.g., Percentage of Loan Balance)
• Interest Calculation Basis: Average Daily Balance Not Including Charges – Monthly (also the default once the two fields above are set)

Charges (draws) added during the period are excluded from the average balance and begin accruing interest the following period.

Use Case: Facility Charging Interest on the Committed Amount

For facilities where interest is charged on the full credit limit no matter how much is drawn:

• Interest Calculation Basis: Credit Limit

Interest is computed on the loan's credit limit (custrecord_da_loan_credit_limit) even when the drawn balance is lower.

Related Articles

• NetLoan - Day Count Convention Best Practices
• NetLoan - Dynamic Schedule Type Setup
• NetLoan - Fixed Installment Loan Type Configuration