Recently, there was a FINPACK News article on the basic functions of the FINPACK Loan Calculator. This article goes in-depth on what the ‘Payment Frequency’ of the calculator means (i.e. the frequency of Annual payments, Monthly payments, etc.). Currently, the loan calculator payment frequency choices are Annual, Bi-monthly, Bi-weekly, Monthly, Quarterly, Semi-annual, Semi-monthly, and Weekly.
FINPACK Payment Frequencies
FINPACK uses the following logic behind the payment frequency calculations within the loan calculator tool.
- Annual – one payment a year. The payment distribution is a ‘1’ in the month designated as the payment date for each year of the loan.
- Bi-monthly – payments occurring every other month. For FINPACK purposes, the payments are every other month. The payment distribution is a ‘1’ every other month for the life of the loan, starting with the first payment date.
- Bi-weekly – payments occurring every other week. For FINPACK purposes, there is a continuous cycle of two payments every month for five straight months, then a month of 3 payments. (This is to ensure 26 payments for the year; the first payment month actually has an extra payment so as to ‘prime the pump’ for the loan). The payment distribution will appear as a ‘3’ in the first month, a ‘2’ for the next 4 months, then for every 6 months during the life of the loan, you will see a ‘3’ and five straight ‘2’s.
- Monthly – payments occurring once a month. The payment distribution is a ‘1’ in every month for the life of the loan.
- Quarterly – payments occurring every three months equaling four payments a year. The payment distribution is a ‘1’ in the first payment month and a ‘1’ every three months for the life of the loan.
- Semi-annual – payments occurring twice a year. The payment distribution is a ‘1 in the first payment month and a ‘1’ every 6 months for the life of the loan.
- Semi-monthly – payments occurring twice a month. The payment distribution is a ‘2’ in every month for the life of the loan.
- Weekly – payments occurring once a week. The payment distribution is a ‘5’ in the first payment month, then a continuous cycle of two months of ‘4’s and a month of ‘5’ for the life of the loan. Depending on when the loan started in the year, FINPACK ensures that the correct number of payments are made for a year shorter than 52 weeks.
Kevin Hamilton provides user & technical support for the Center’s desktop and web applications. Kevin joined the Center for Farm Financial Management in 2016. He worked at a leading agribusiness cooperative and helped numerous customers in the agriculture/agribusiness industry prior to joining the Center. Kevin grew up on a crop and livestock farm in southeastern Minnesota (Mower County) and stays connected to agriculture via his family and friends who are still engaged in farming. Kevin earned both his B. S. degree in Business Management and his MBA at the University of Phoenix.
