

627B LeaseMaker APRChecker Routine

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 interestrate buydown 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.
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].

Early Terminations

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 chargebacks.
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.

Checker Routine
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.

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.)

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.)

DAYS TO #1 xx?
DAYS TO 1ST xx?

If using a Federal or 360day 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?

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.

Endnotes:

Computed APR percentage: APR is
calculated by Federal TruthinLending Regulation Z, §226.14 and Appendix J method using the calendar
method selected to measure the length of the first period.


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).


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.


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.


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.

11 Feb 2014
