Special Financing Calculator Help Please

[Steve]

Looking for a calculator for estimating insurance premium financing payments.

Here are my "variables"

Premium payment amount = $75,000
Downpayment amount= 25%
Financing Rate= 3.27%
Number of annual payments = 9
First Payment Due Date= 1/1/10
Last Payment Due Date= 9/1/10

Thanks!!

 

[Joe User]

Looking for a calculator for estimating insurance
premium financing payments. Here are my "variables"
Premium payment amount = $75,000
Downpayment amount= 25%
Financing Rate= 3.27%
Number of annual payments = 9
First Payment Due Date= 1/1/10
Last Payment Due Date= 9/1/10

Correct me if I'm wrong, but I don't think there is anything "special" about
this.

As I understand it, you are talking about a 9-month(?) loan of $75,000 less
25% (i.e. $56,250) at an annual rate of 3.27%.

Assuming the loan originates on 12/1/2009, one month before the first
payment is due, and assuming that your variables are in B1:B6, then:

=PMT(B3/12, B4, -B1*(1-B2))

Note: I am assuming __monthly__ payments, even though you wrote "number of
__annual__ payments". Contradictorily, you also wrote that the first and
last payments are 1/1/10 and 9/1/10, which comprise only 9 months.

If you meant to say that the first and last payments are 1/1/10 and 1/1/18
(9 years), then:

=PMT(B3, B4, -B1*(1-B2))

But that assumes no interest accrues between the loan origination date and
the first payment. True?

 

[Joe User]

PS.....

Financing Rate= 3.27%

[....]
=PMT(B3/12, B4, -B1*(1-B2))
[....]
=PMT(B3, B4, -B1*(1-B2))

I ass-u-me-d that the "financing rate" is the annual interest rate.
However, US law only requires a lender to disclose the APR, not(!) the simple
annual or periodic interest rate.

The APR is intended to be useful (arguably) for comparing loans with
different terms, since the APR incorporates all "finance charges" (as defined
in law), which may include more than just the periodic interest.

If the "financing rate" reflects more than just the periodic interest, it is
not useful for calculating the periodic payment.

If you have a breakdown of all the "finance charges" other than periodic
interest, I might be able to estimate the periodic interest rate. I would
assume that all other "finance charges" are due on the loan origination date,
not periodically, unless you state differently.

Also note: I ass-u-me-d a US loan, since you used "$" without
qualification. The PMT formulas may or may not work for loans in other
locales, depending on their rules for stating the "financing rate".


----- original message -----

 

[Joe User]

PS....

Financing Rate= 3.27%

[....]
=PMT(B3/12, B4, -B1*(1-B2))

The PMT formulas assume that the "financing rate" is the annual interest
rate, the rate used to detemine the amount of periodic interest.

But US law only requires lenders to disclose the APR, a rate that may
(should) include any other "finance charges" (as defined in law). US law
does not(!) require the disclosure of the simple annual or periodic interest
rate.

The APR is intended to be useful (arguably) when comparing loans with
different costs. But the APR is not useful for computing the periodic
payment if it includes costs other than just periodic interest.

If the "financing rate" above is an APR based on more than just the periodic
interest and you do not know the simple annual or periodic interest rate, if
you let me know what those other "finance charges" are (they should be
identified in the disclosure), I might be able to determine the simple annual
interest rate that can be used in the PMT formulas.

I would assume that all other "finance charges" are paid at the time of the
loan origination, unless you state otherwise.

[Forgive me if this is posting is redundant. I don't see my previous PS,
submitted quite some time ago using the MSDG web interface. I might have
pressed the wrong button an deleted it somehow :-(.]


----- original message -----

 

[Steve]

Joe- thanks

Correct me if I'm wrong, but I don't think there is anything "special" about
this.

As I understand it, you are talking about a 9-month(?) loan of $75,000 less
25% (i.e. $56,250) at an annual rate of 3.27%.

Assuming the loan originates on 12/1/2009, one month before the first
payment is due, and assuming that your variables are in B1:B6, then:

=PMT(B3/12, B4, -B1*(1-B2))

Note: I am assuming __monthly__ payments, even though you wrote "number of
__annual__ payments". Contradictorily, you also wrote that the first and
last payments are 1/1/10 and 9/1/10, which comprise only 9 months.

If you meant to say that the first and last payments are 1/1/10 and 1/1/18
(9 years), then:

=PMT(B3, B4, -B1*(1-B2))

But that assumes no interest accrues between the loan origination date and
the first payment. True?