Conference 7.286::dcu

    If you have access to Lotus there is the @PMT(prn,int,term) function
    which calculates the per period payment according to the formula
    
                                                -term
               @PMT result = pmt*{int/[1-(1+int)     ]}
    
    This is the method financial institutions use to calculate payment
    amounts. You could obtain the same results from using a set of 
    amortization tables available at most book stores.
    
    
    Linda     
                                 

    Most inexpensive business calculators will do it for you. For
    example, the Business Analysis II from TI will allow you to
    compute monthly payments, interest/principal breakdowns for
    any payment, amortization schedules,etc. It costs about $20.
    
    As mentioned in the last Note, most spreadsheets will also do
    loan calculations.
    

    Maybe somewhere out there can answer this question.  What method does
    the DCU use to calculate the interest on the outstanding balance of an
    auto loan for ONE month ???
    
    I have used the annual rate/12*unpaid balance, the daily periodic rate,
    the annual rate/52 etc, etc and I can not come up with the same number
    that appears on my statement for the interest.  
    
    It looks to me like the DCU is charging .25% more than the stated rate.
    
    Every other loan or time payment I can calculate, but not the DCU.
    
    Who knows the answer ??  

    Most banks use a daily rate equal to the APR/360 (at least when they're
    loaning money they do -- that way they get little extra in any billing
    period that's over 30 days).  If interest is compounded daily, use the
    average daily balance (sum of balances each day during the period
    divided by the number of days in the period) times the daily rate times
    the number of days in the period to calculate the interest. 
    
    /Ed

    
    ANSWER TO REP/4
    They call it the word games all over the world.If find out what
    they are doing they come-up with a new way..Play the numbers..
    Renimd yourself the world is made-up of numbers.
    

    Ref.3
    
    Let me try this thing again using actuals from my used car loan at the
    DCU.
    
    On my monthly statement it says that the annual interest rate is 13.25%
    and the "daily periodic rate" is .036301%  This turns out to be the
    annual rate/365 so it looks like we are playing with a full year (ref
    .4)
    
    Now, using the actual "unpaid balance" and "interest paid" figures for
    the months of January (31 days) and February (28 days) I divided the
    interest paid by the unpaid balance to determine what interest rate I
    was being charged.
    
    For January I got 1.12541% which equates to 13.50492% annual and
    for Feb.    "  "  1.12513%   "      "     " 13.50156%   "   .
    
    This has led this person to believe that I am actually being charged
    13.50% annual interest rather than the 13.25% which is stated on my
    statement.
    
    Maybe someone on this note could get an official DCU
    explaination...???

        Sounds like they may be using the "Rule of 78" calculation. I have
        something in the office explaining that rule. I shall post it
        soon, and seen if the method calculation gels with you figures at
        all.
        
        q
        

Did you use the unpaid balance for the beginning of the month or did you use the
unpaid balance after the payment was deducted ?

    RE: .8
    
    I used the unpaid balance at the beginning of the month to divide into
    the actual interest charge for the same month to get the figures shown
    in .6   I've done this with other time payments I have and the interest
    rate charged always equals the stated rate of interest.  This is why
    I am baffled with my DCU loan rate.
    
    mike

    Maybe they're compounding on a daily basis.
    
    /Ed

    re: .0
    
    This may be very simple.  When you took out the loan, the monthly
    payments were calcualted based upon the amount of the loan and the
    number of days (over 30) that you had the money before you made the 
    first payment, upon which interest is also charged.  This is an extra 
    extra finance charge, and results in a small amount being added to
    each payment to cover this up-front period.  Thus, to calculate your
    actual monthly payment, you'd have to take the unpaid balance at the
    beginning of the period times the periodic interest rate, PLUS the
    initial period of time that you had the money before the first payment
    was made, times the daily rate, divided by the life of the loan in months.
    
    This only happens if the time span between the closing of your loan and
    the first monthly payment due date is greater than the usual 30-days
    between payments.  Many banks avoid this by setting your payment date
    within 30-days of the closing.  I believe DCU uses only the first or
    the fifteenth of the month as due dates, and in my case that means a
    lapse of 39-days to the first payment, so I have to pay interest on the
    extra 9-days.  On a hypothetical $15,000 loan for 48 months at 12%,
    this would equate to an up-front extra interest charge of $45 over the
    life of the loan, which would add $.94 to each payment, for the 9-days
    of interest.
    
    Go back and look at your loan closing papers and your first payment due
    date, and if there's a lapse of more than 30-days, calculate your extra
    interest payment as above, divide by the life of the loan in months,
    and see if that amount is the phantom "incalculable" payment difference
    you're struggling to find.  BTW, if you just divide the payment amount
    by the unapid balance to calculate the interest rate, it will look like
    an incrementally higher rate than stated in your contract, but it's
    not.  In the example above, it would make the interest rate look like
    12.13% instead of 12% as stated in the contract!
    
    Have you asked a loan officer to go over this with you?  I'm sure this
    is what's happening in your case, and you'll never get this level of
    explanation from a branch teller, no offense intended.
    
    Dick.

    REF: .6
    
    I called the DCU and talked to Peggy ?? who was very pleasant and
    accomodating.  The answer for car loans with a weekly withdrawal to
    an escrow account is.....
    
    Take the annual interest rate and divide by 365 (this is equal to the
    daily periodic rate.  Multiply this times the beginning balance for the
    period (this is the beginning balance on the 1st of the month)
    Now, multiply this amount by the number of days in the month  and you
    will have the amount of the interest payment for that month.
    
    Escrow is always applied against the outstanding balance on the 1st of
    every month regardless of whether it is a work day or not.
    
    What led me a stray was that the loan/escrow information is actually
    reflecting last months activity because you DCU statement is as of the
    end of the month, i.e. on the DCU statement for February the loan
    information was reflecting January's activity because Febuary's payment
    would not occur until March 1st and therefore was not included.
    I know this last bit is confusing but I did the best I could.
    
    I've checked the calculation on my statements and I am now satisfied
    that I am paying the stated interest rate and nothing more.
    
    mike

Re: .12

>>> I've checked the calculation on my statements and I am now 
>>> that I am paying the stated interest rate and nothing more.
    
Once again, thank you posting the final resolution of the problem.
It may seem like a small courtesy to fellow noters and DCU both,
but many people do not even do this.

\Gary