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627B LeaseMaker APRChecker™ Routine
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The 627B LeaseMaker can be used to
check the Annual Percentage Rate (APR) and Federal Box Disclosure of retail
contracts, and to compute the dealer reserve by three different
methods. A minimum dealer reserve can be specified, and
a percentage paid value can be specified. The routine can also do interest-rate
buy-down calculations, even for 0% loans.
The various
disclosure items are entered: APR, Finance Charge, Amount Financed, Total of
Payments, Payment Schedule, etc. The routine
checks these
numbers for mathematical accuracy.
If any error or deviation is detected, it is reported. The entered data and results can be printed
with the optional LeaseMaker Printer Kit. See a list of
input prompts and calculated output data.
(The APRChecker™
product is also available as a APRChecker PC
Program.)
For each dealer reserve
method,
there are two code numbers. Use the
first number to start the routine without a printer, i.e., this code should be
used if you are running the calculator without a printer.
A
portion of the calculated dealer reserve can be paid to compensate the lender
for Early Terminations.
If you want a printed record, and have the
optional printer kit, use the second code number to start the routine. To start the APRChecker
routine,
push the [Setup] key, enter the appropriate code number in response to the
"CODE?_" prompt, and push [Enter].
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Early Terminations
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When the dealer reserve is paid up
front, a problem for the lender arises if the borrower pays the loan off
early. In this case, the lender has
advanced an amount to the dealer that is based on the loan running to maturity. If the loan does not run to maturity, the
lender will not realize the interest income that was expected.
Some lenders charge the dealer back
for unearned portions of the dealer reserve due to early terminations. The dealer may be required to leave a
portion of the accumulated dealer reserve amounts on deposit with the lender as
security against future charge-backs.
Another common method is to only
advance the dealer a percentage of the calculated reserve amount (typically
65%-80%) and then not bother to charge the dealer back for early
terminations. This percentage paid can
be entered in the PCT PD % field.
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CODE = 581/681
584/684
585/685 |
Push
the [Setup] Key and enter the code for the desired dealer
reserve method in response to the “CODE”
prompt. After entering the code to
run this routine once, you can push the Star [*]
function key to run it again. |
| APR %
xx.xx? |
Enter
the disclosed APR as a percentage. |
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CHG
xxxxx.xx?
|
Enter
the disclosed Finance Charge. |
| AMTF
xxxxx.xx? |
Enter
the disclosed Amount Financed. |
| TPMTS
xxxxx.xx? |
Enter
the disclosed Total of Payments. |
| (If the Amount Financed plus the Finance
Charge does not equal the Total of Payments, an error will be reported.)
(For
0% loans, the Finance Charge must be $0.00, and the Amount Financed must
equal the Total of Payments.)
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| TERM
xx? |
Enter
the term in months. |
| PMT
xxxx.xx? |
Enter
the payment amount. |
| (If the number of payments times the payment
amount does not equal the Total of Payments, an error will be reported.)
(For
0% loans, enter the regular monthly payment. If the last payment
needs to be adjusted by a few cents to make the stream of payments exactly
equal the Total of Payments, the routine will calculate it.)
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DAYS TO
#1 xx?
DAYS TO 1ST xx? |
If
using a Federal or 360-day calendar the DAYS TO #1 prompt will appear. If
using an Actual calendar, the DAYS TO 1ST prompt will appear. See Calendar systems.
In either case, enter the total number of days to the first payment, thus if
there are 45 days to the first payment, enter "45".
See the Setup Routine to select the calendar method. See also Which
Calendar to Use. |
| PPD CHG
xx.xx? |
Enter
the prepaid charge. |
APR COMP
xx.xx%
* APR WARNING *
APR DIFF xx.xx%
LOAN RATE xx.xx%
[Reserve Method] |
Computed APR
percentage.
If the computed APR deviates by more than 0.05%, this warning message
appears.
Difference between disclosed and computed APRs.
If there is a prepaid charge, the loan rate is calculated and disclosed here.
The dealer reserve method appears here. |
| BUY RATE
xx.xx%? |
Enter
the lender's buy rate. The buy rate cannot be 0%,
however you can discount a loan with an A.P.R. or loan rate of 0%. |
| MIN
RES xx.xx?
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Enter
the minimum dealer reserve amount the lender will pay. |
| PCT PD %
xx? |
Enter
the percentage of the dealer reserve amount that is paid to the
dealer (see Early Terminations). |
RESERVE xxxx.xx
BUY DOWN xxxx.xx |
The computed
dealer reserve or interest rate buy down amount will appear. |
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| Endnotes: |
Computed APR percentage: APR is
calculated by Federal Truth-in-Lending Regulation Z, §226.14 and Appendix J
method using the calendar method selected to measure the length of the first
period. |
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Loan
Rate Calculation with Prepaid Charge: If there is
a prepaid charge, the loan interest rate will be lower than the APR. If there is no prepaid charge, the loan
interest rate will be the same (or very nearly the same). |
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Buy Rate: If the buy
rate is equal to or less than the loan interest rate, the dealer reserve will
be calculated. If the buy rate is
greater than the loan interest rate, the interest rate buy down will be
calculated. The loan rate can be 0%, but the buy rate must be greater than
0. |
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Minimum Reserve: Even if the
buy rate is the same as the loan interest rate, the minimum applies. For interest rate buy down calculations,
this prompt does not appear and the minimum is not applied.
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Percentage Paid:
To compensate the lender for early
terminations, only a portion of the computed dealer reserve is actually paid to
the dealer. You should enter that
percentage here. For interest rate buy
down calculations, this prompt does not appear and the percentage is not
applied. |
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