
Interest Year Calculations
Interest Year determines the calculation method for the per diem interest of the loan and will thus affect the Annual Percentage Yield.
Interest Year in the Nortridge Loan System is defined by a Numerator and a Denominator, both of which can be one of five values: 360, 364, 365, 366, or ACT. Since the Interest Year is defined as a ratio of two instances from these five values, there are 25 possible interest year definitions:

N = 360

N = 364

N = 365

N = 366

N = ACT


D = 360

360 / 360 
364 / 360 
365 / 360 
366 / 360 
ACT / 360 
D = 364

360 / 364 
364 / 364 
365 / 364 
366 / 364 
ACT / 364 
D = 365

360 / 365 
364 / 365 
365 / 365 
366 / 365 
ACT / 365 
D = 366

360 / 366 
364 / 366 
365 / 366 
366 / 366 
ACT / 366 
D = ACT

360 / ACT 
364 / ACT 
365 / ACT 
366 / ACT 
ACT / ACT 
The value: ACT represents the actual number of days in the current year. All Interest Years containing the value of ACT emulate other interest year calculations but may emulate different interest years depending on the leap year status of the current year.
Interest Year 
In NonLeap Year Emulates 
In Leap Year Emulates 

ACT / 360 
365 / 360 
366 / 360 
ACT / 364 
365 / 364 
366 / 364 
ACT / 365 
365 / 365 
366 / 365 
ACT / 366 
365 / 366 
366 / 366 
ACT / ACT 
365 / 365 
366 / 366 
360 / ACT 
360 / 365 
360 / 366 
364 / ACT 
364 / 365 
364 / 366 
365 / ACT 
365 / 365 
365 / 366 
366 / ACT 
366 / 365 
366 / 366 
To calculate the per diem, first multiply the interest rate (r) by the principal (p) to derive the annual interest (i).
To calculate the per diem (daily) interest, use the following equation where:
i = annual interest 
z = per diem interest 
n = numerator of interest year 
d = denominator of interest year 
l = number of days in current year (365 if a nonleap year and 366 if a leap year) 
The same equation, written in single line format (as a computer equation) would look like this:
The Interest Year 360/360 is a special case. In this case, the per diem interest is the annual interest divided by the number of payments in a year, divided by the number of days in the current payment period. This interest year is inherent in the amortizing equations, and while a Fixed AmortizationType of interest method where interest is accrued daily on the amount of principal specified in the amortization schedule. Early or late payments do not affect the accrual. Principal reduction transactions will cause the schedule to reamortize. The interest is noncompounding and is typically calculated on a 360/360 interest year. loan could be done with other interest years, 360/360 is assumed for Fixed Amortization loans because this is the only interest year calculation where the accrual and an amortization schedule built from the amortizing equations will directly synchronize.
For each interest year, you may calculate the Annual Percentage Yield (APY) by multiplying the Annual Percentage Rate (APR) by the factor listed in the table below (not accounting for fees and charges).
Interest Year 
APY factor (NonLeap) 
APY factor (Leap Year) 

360 / 360 
1 
1 
364 / 360 
1.01111 
1.01111 
365 / 360 
1.01389 
1.01389 
366 / 360 
1.01667 
1.01667 
ACT / 360 
1.01389 
1.01667 
360 / 364 
0.98901 
0.98901 
364 / 364 
1 
1 
365 / 364 
1.00275 
1.00275 
366 / 364 
1.00549 
1.00549 
ACT / 364 
1.00275 
1.00549 
360 / 365 
0.98630 
0.98630 
364 / 365 
0.99726 
0.99726 
365 / 365 
1 
1 
366 / 365 
1.00274 
1.00274 
ACT / 365 
1 
1.00274 
360 / 366 
0.98361 
0.98361 
364 / 366 
0.99454 
0.99454 
365 / 366 
0.99727 
0.99727 
366 / 366 
1 
1 
ACT / 366 
0.99727 
1 
360 / ACT 
0.98630 
0.98361 
364 / ACT 
0.99726 
0.99454 
365 / ACT 
1 
0.99727 
366 / ACT 
1.00274 
1 
ACT / ACT 
1 
1 
Example:
A 10% APR loan with an Interest Year of ACT/360 (the Interest Year with the highest possible yield) will have an APY of 10.1389% in nonleap years and 10.1667% in leap years.Over the life of a 30 year loan with a starting principal of $100,000, this would result in an additional $2,183 in accrued interest.