What is the difference between TValue Normal and TValue Extended?

What is the difference between TValue Normal and TValue Extended?

These two field values are held within the Finance Product configuration as well as within the Contract's Finance Product Details section, in the field called "Date Counting Method".  The field was added to assist in correcting a calculation error within the TValue 5 software utilized as the ASPIRE v5 amortization engine.  When a Contract is set up as a 30 day per month / 360 day per year contract AND the payment happens to be due within the last 4 days of the month (28th, 29th, 30th, 31st, or "Last Day of Month"), occasionally the TValue 5 software would result in an amortization error.

Value Definitions:
TValue Normal:  Typically refers to the standard "US Rule" method used to calculate interest, ensuring that interest is not charged on interest.  This is the default option in ASPIRE v5. 

TValue Extended:  Typically refers to the "Rule of 78" method of calculating interest, primarily used in the past for loans.  It is a simplified, straight-line approximation of compound interest, and typically used when there are irregular payment amounts or timing.  This was also created by TValue as an attempt to correct the 30/360 amortization issue caused by TValue 5, experienced in subsets of contracts where the payment is due on the last 4 days of the month while utilizing the 360 day year length setting.
     
                  


Ultimately, LTi Technology Solutions has since suggested editing a contract in one of the following ways to truly ensure this TValue 5 caused amortization error is bypassed.
  1. If the Contract must keep a 360 day year, move the payment due date to the 1st of the following month.
  2. Change the Contract year length to 365 days, and keep the payment due date set to the original due date (28th, 29th, 30th, 31st, or "Last Day of Month").


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