Loan Interest Calculation
Sinking Fund uses simple monthly interest to calculate loan repayments.
Interest Rates
Interest rates are configured per fund:
- Member loans — Default 3% per month (configurable).
- Non-member loans — Default 5% per month (configurable). Non-members must be referred by a fund member.
Monthly Payment Formula
For a loan amount P with monthly interest rate r over n months:
Monthly Payment = P x (1 + r x n) / n
For example, a member loan of 10,000 PHP at 3% over 3 months:
- Total interest = 10,000 x 0.03 x 3 = 900 PHP
- Total repayment = 10,900 PHP
- Monthly payment = 10,900 / 3 = 3,633.33 PHP
Loan Limits
The maximum loan amount is calculated as:
Loan Limit = Current Total Fund Balance - Total Outstanding Loans
This ensures the fund always has enough liquidity to cover existing obligations.
Interest Distribution
At fund maturity, all collected interest is pooled and distributed proportionally based on the number of heads each member holds. For example, if the total interest is 9,000 PHP and there are 9 total heads across all members, each head receives 1,000 PHP.
Repayment Schedule
Repayments are due monthly from the loan disbursement date. Late repayments may incur additional penalties based on the fund's loan penalty configuration.