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???
Error in kids car installment contract??
Re: Error in kids car installment contract??
Perhaps post the exact terms here and people can help with more exact calculations.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???
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Re: Error in kids car installment contract??
What is the discrepancy? Are you compounding daily? Or monthly?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???
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
Re: Error in kids car installment contract??
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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Re: Error in kids car installment contract??
^ThisNate79 wrote: ↑Fri Dec 03, 2021 5:51 pmPerhaps post the exact terms here and people can help with more exact calculations.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???
Real Knowledge Comes Only From Experience
Re: Error in kids car installment contract??
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?
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?