South Africa | How Does The Loan Deduction Interest Note Component Calculate?
The Loan Deduction Interest Note Component will take the outstanding balance of the loan and multiply it by the monthly/fortnightly/weekly interest rate (depending on the frequency) provided by the user.
Note: The interest rate is inserted on the Loan Deduction component via the Recurring Payroll Components Screen. This interest value is an annual value and will therefore be divided by the number of periods in the Tax Year to convert the applicable frequency rate for the payslip.
Example:
The below weekly employee has a loan deduction component added to their payslip.
The outstanding balance on the loan is R99,192.31 (taking into account previous installments and interest accumulated). The interest percentage is calculated as 10%/52 (periods per the Payroll Cycle in the Tax Year) = 0.009123.
The formula result:
The component calculation result:
R99,192.31 * 0.001923 = R190.75.
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