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Beneficial loan interest calcs

Directors loan in credit until July & then increasingly overdrawn until 5th April. Does average interest get worked out over 12 months or over the 8 months that the loan was overdrawn - i.e. opening Nil + closing bal / 2, or is it opening Nil + closing bal / 2 x 8/12's?
Rob

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12th Jun 2009 23:00

Beneficial loan
Average over the period that the loan is overdran.

The average method is calculated by taking the loan outstanding at start period. So when it became owerdraw that's balance you need to take as an opening balance add closing balance/2 x8/12's.

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