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  1. #1
    Join Date
    Jan 2009
    Posts
    5

    Default Rate Per Period Interest Rate Calculation

    My question involves personal finance in the State of: California


    Can someone please explain how the following language written in a security agreement (Mortgage of Chattels) should be calculated?

    “[…..]In installments as herein stated, for value received, I promise to pay to [Lender/Payee], or at a place to be designated by the payee, TWENTY FIVE THOUSAND FIVE HUNDRED AND NO/100 DOLLARS, with interest from [first payment date], on unpaid principal at the rate of twelve (12%) percent per annum; principal and interest payable in installments of $300.00 or more on the same day of each and every month, beginning on the [0th] day of [month & year] and continuing until paid in full.”

    One of my bankers told me he thinks it should be calculated at 0.949% per month because it compounds annually. The Lender/Payee thinks it should be calculated at 1% per month because it compounds monthly. The gap between the two methods of calculating this interest rate is $3,172.53.

    Can someone who actually knows how to interpret the above language tell me how a California court will likely interpret and calculate this?

  2. #2
    Join Date
    Sep 2005
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    Behind a Desk
    Posts
    98,846

    Default Re: Rate Per Period Interest Rate Calculation (California)

    Yes - your accountant. Although my instict, based upon the snippet you've shared, is to agree with your banker.

    So... are you the borrower or lender, and is this a contract you wrote yourself?

  3. #3
    Join Date
    Jan 2009
    Posts
    5

    Default Re: Rate Per Period Interest Rate Calculation (California)

    My wife was the borrower and as I understand it, the contract was written by the title company.

    This is actually one small piece in a very complex case that involves overpayment of a loan, based in part on the interest calculation discussed herein (financial law), the death of the lender prior to transfer/perfection of title (probate law), the local county's Redevelopment Agency purchasing the mobile home park and threatening eminent domain after purchasing the mobile home park (mobile home law & constitutional law), said county consorting with the heirs of said lender to extort money from us for the heirs benefit and to get the deal closed quickly for the county's benefit (criminal law?) and thatís just the tip of the iceberg.

    In other words, I'm caught in a legal blender and would have to pay tens of thousands of dollars for an army of lawyers to protect my rights because lawyers don't practice all of these areas of law.

    It looks like my only recourse is to try and limit the damage the best I can and to send my story to a local newspaper. If I do, Iíll post it here but Iím not sure where I would submit it.

    While the reply isn't very helpful, it is certainly appreciated.

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