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I've seen this twice now, and I just don't understand it. When calculating a "Finance Charge" for a fixed rate loan, applications make the user enter in all possible loan amounts and associated finance charges. Even though these rates are calculable (30%), they application makes the user fill out a table like this:

Loan Amount    Finance Charge    
100            30
105            31.5

etc, with the loan amounts being provided from $5 to $1500 in $5 increments.

We are starting a new initiative to rebuild this system. Is there a valid reason for doing a rate table this way? I would imagine that we should keep a simple interest field, and calculate it every time we need it.

I'm really at a loss as to why anyone would hardcode a table like that instead of calculating...I mean, computers are kind of designed to do stuff like this. Right?

Matt Dawdy
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1 Answers1

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It looks like compound interest where you're generously rounding up. The 100 case + 1 is pretty boring. But the 105 case + 1 is interesting.

T[0] = FC[105] => 31.5
T[1] = FC[136.5] => ?

Where does 136.5 hit -- 135 or 140? At 140, you've made an extra $1.05.

Or... If the rates were ever not calculable, that would be one reason for this implementation.

Or... The other reason (and one I would do if annoyed enough) would be that these rates were constantly changing, the developer got fed up with it, and he gave them an interface where the end users could set them on their own. The $5 buckets seem outrageous but maybe they were real jerks...

Austin Salonen
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  • But you would probably, if left to your own design, just make it a calculable thing, right? You wouldn't restrict your users to ONLY having loans that are in multiples of $5. You'd let them have any loan amount, then multiply that by 0.3 for the "finance charge", right? Less programming, no need for a table that can get screwed up, wouldn't allow careless mistake to slip in, etc? – Matt Dawdy Mar 02 '11 at 20:03
  • @Matt Dawdy: Indeed *I* would but that's just because it makes sense. This table doesn't prohibit loans where `$$$ % 5 != 0`; it just prohibits finance charges that aren't increments of $1.50 (which you could still easily do programmatically). – Austin Salonen Mar 02 '11 at 20:30