§ 24-4.6-1-104 — Computation of interest; methods

(a) The parties may agree upon any
method of computing interest on a loan or a forbearance of money,
goods, or things in action if the amount of interest on the unpaid
balances of the principal does not exceed any limitation imposed by
law upon charges incident to the extension of credit.
(b) Methods of computing interest to which parties may agree under
this section include the following:
(1) Simple interest on the unpaid balances of the principal.
(2) Simple interest on the outstanding balance of the principal to
which is added past due installments of interest, the sum of which
forms the principal upon which interest thereafter shall be
computed. The addition to principal in this manner may occur
repeatedly but not more frequently than daily.
(c) Unless the parties agree otherwise, the method of computing
interest agreed upon under this section continues to apply after the term
of the loan or forbearance, including after the award of a judgment on
the loan or forbearance, until all principal and interest and the amount
of any judgment are paid.
(d) If the parties do not agree on the method of computation, interest
shall be computed and charged:
(1) at the rate agreed to by the parties or as provided in section
102 of this chapter; and
(2) according to the method described in subsection (b)(2).

Legislative History

As added by P.L.140-1990, SEC.1.