Leap year loan interest

[13m]

We've recently moved some commercial finance to a new bank and yesterday they wrote to me saying that they want extra interest because it's a leap year.

Our loan agreement says that the interest is a X% over base rate and that it is calculated on a 365 day year. To my mind therefore leap years are "in the price" and no extra should be charged.

Anyone else come across this?

[13m]

Sharted said:

Seems a good wheeze.

I'd respond by saying that I'll make my monthly payments on the 29th day of the month only in future.

The tone of the correspondence does come across like it's something they have just thought up.

[13m]

Sharted said:

The finance sector is full of managers and consultants looking for little schemes such as this to justify their salary or fees, I've dreamt up a few myself over the years.

Does it make a big difference to the annual interest bill?

A few hundred quid. But it wouldn't matter if it was a tenner, as far as I am aware if the terms of the loan are that interest is calculate on a 365 day year, that's how the loan should be calculated.

[13m]

Kudos said:

what did the T's & C's of the original contract state?

If not listed in there, tell them where to go.

"a few hundred quid interest" for an additional day, must have been some sum in the first place!

"We will calculate the interest on the Loan on a daily basis and on the basis of a 365 day year".

No mention of leap years as far as I can see.