Error in kids car installment contract??

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James2
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Joined: Fri Mar 29, 2013 7:40 pm
Location: Minnesota

Error in kids car installment contract??

Post by James2 »

OK, wondering if anyone else has come across this. I was running through some numbers the other day and thought that i'd look at the installment contract my kid is paying off their car with. Try as I might, using amortization calculators in Excel, and on the web I cannot get the monthly amount to match what they are charging with the interest rate they say they are charging.

Now, it's possible I've just missed something, but the new truth in lending disclosures don't seem to leave much to the imagination...

Shouldn't I just be able to put the interest rate, amount financed, and no. of payments into one of these calculators and have the amount match the per month amount on the same form???
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Nate79
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Re: Error in kids car installment contract??

Post by Nate79 »

James2 wrote: Fri Dec 03, 2021 5:46 pm OK, wondering if anyone else has come across this. I was running through some numbers the other day and thought that i'd look at the installment contract my kid is paying off their car with. Try as I might, using amortization calculators in Excel, and on the web I cannot get the monthly amount to match what they are charging with the interest rate they say they are charging.

Now, it's possible I've just missed something, but the new truth in lending disclosures don't seem to leave much to the imagination...

Shouldn't I just be able to put the interest rate, amount financed, and no. of payments into one of these calculators and have the amount match the per month amount on the same form???
Perhaps post the exact terms here and people can help with more exact calculations.
neverpanic
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Joined: Sun May 10, 2020 12:26 am

Re: Error in kids car installment contract??

Post by neverpanic »

James2 wrote: Fri Dec 03, 2021 5:46 pm OK, wondering if anyone else has come across this. I was running through some numbers the other day and thought that i'd look at the installment contract my kid is paying off their car with. Try as I might, using amortization calculators in Excel, and on the web I cannot get the monthly amount to match what they are charging with the interest rate they say they are charging.

Now, it's possible I've just missed something, but the new truth in lending disclosures don't seem to leave much to the imagination...

Shouldn't I just be able to put the interest rate, amount financed, and no. of payments into one of these calculators and have the amount match the per month amount on the same form???
What is the discrepancy? Are you compounding daily? Or monthly?
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Gill
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Re: Error in kids car installment contract??

Post by Gill »

Many years ago I spent a brief time in a bank’s installment loan department, and as I recall, the method used was called the discount method. I believe that means you sign a note for the principal on which the interest is computed and then the proceeds to the borrower are after the interest is deducted resulting in a higher APR. I may not be exactly correct on this but I think this is the general idea,
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MikeG62
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Re: Error in kids car installment contract??

Post by MikeG62 »

Nate79 wrote: Fri Dec 03, 2021 5:51 pm
James2 wrote: Fri Dec 03, 2021 5:46 pm OK, wondering if anyone else has come across this. I was running through some numbers the other day and thought that i'd look at the installment contract my kid is paying off their car with. Try as I might, using amortization calculators in Excel, and on the web I cannot get the monthly amount to match what they are charging with the interest rate they say they are charging.

Now, it's possible I've just missed something, but the new truth in lending disclosures don't seem to leave much to the imagination...

Shouldn't I just be able to put the interest rate, amount financed, and no. of payments into one of these calculators and have the amount match the per month amount on the same form???
Perhaps post the exact terms here and people can help with more exact calculations.
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Beachey
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Re: Error in kids car installment contract??

Post by Beachey »

I just compared our present car payment with Excel.

Actual $XXX.56
Excel $XXX.19

From memory, this is typical when it comes to consumer loans, even when calculating a mortgage payment with Excel. Obviously, the bank is using a method that is favorable to them but likely any front-line finance people you deal with aren't going to be able to explain the difference in the calculation.

Is this the type of difference you are seeing?
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