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glenn911C4S

Original Poster:

251 posts

120 months

[news] 
Friday 5th March 2010 quote quote all
Anyone know a good online PCP calculator that you can alter the loan amount, rate, deposit and period?

Manks

7,725 posts

108 months

[news] 
Saturday 6th March 2010 quote quote all


No, and be careful there is one on the Internet that doesn't add in the double interest on the balloon payment.

The only other ones I have seen want you to choose a model and give them your details so they can contact you.

If you don't find what you want email me. Having just gone through working all this out I can probably give you a formula. Though that is not as easy as using an online calculator obviously.

Manks

Dr Jekyll

7,740 posts

147 months

[news] 
Sunday 7th March 2010 quote quote all
Manks said:
No, and be careful there is one on the Internet that doesn't add in the double interest on the balloon payment.
rofl

johnfm

10,956 posts

136 months

[news] 
Sunday 7th March 2010 quote quote all
Careful Dr Jekyll

Manks will quote the FSA at you!

OP

Just build a spreadsheet

the only tricky bit is the APR calculation

You need to build a column of cash flows (ie -20000 for the 20000 car loan, then +ve amounts for each monthly payment and the balloon at the end).

Then apply the IRR function to the cashflows. Then use the IRR to calc APR.

Manks

7,725 posts

108 months

[news] 
Sunday 7th March 2010 quote quote all
Dr Jekyll said:
Manks said:
No, and be careful there is one on the Internet that doesn't add in the double interest on the balloon payment.
rofl
So you don't think interest is paid on the balloon twice then no?

Manks
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Dr Jekyll

7,740 posts

147 months

[news] 
Sunday 7th March 2010 quote quote all
Manks said:
Dr Jekyll said:
Manks said:
No, and be careful there is one on the Internet that doesn't add in the double interest on the balloon payment.
rofl
So you don't think interest is paid on the balloon twice then no?

Manks
No.

If loan A means owing an average of £500 for 12 months (EG because £1000 is paid off in instalments), and loan B means owing an average of £1000 for the same period (EG because it's a one off balloon payment), then for the same interest rate I would expect to pay twice as much interest on loan B.

Not because interest is paid twice, but because I am effectively borrowing twice as much money.

If you insist on regarding the interest rate as half the true rate then you have to double it to get the right figure, but that is simply a demonstration that your figure was wrong in the first place.

Manks

7,725 posts

108 months

[news] 
Sunday 7th March 2010 quote quote all
Dr Jekyll said:
Manks said:
Dr Jekyll said:
Manks said:
No, and be careful there is one on the Internet that doesn't add in the double interest on the balloon payment.
rofl
So you don't think interest is paid on the balloon twice then no?

Manks
No.

If loan A means owing an average of £500 for 12 months (EG because £1000 is paid off in instalments), and loan B means owing an average of £1000 for the same period (EG because it's a one off balloon payment), then for the same interest rate I would expect to pay twice as much interest on loan B.

Not because interest is paid twice, but because I am effectively borrowing twice as much money.
Perhaps I should be more explicit. When being offered a PCP deal you will, in all probability, be quoted a flat rate. This must be applied twice to the deferred or "balloon" payment. Once to the part of the loan that is being amortised.

Dr Jekyll said:
If you insist on regarding the interest rate as half the true rate then you have to double it to get the right figure, but that is simply a demonstration that your figure was wrong in the first place.
It is not a question of me "regarding" the interest rate as half the true rate. I am using the figure that will inevitably be quoted by the dealer in order to obtain the right answer.

Manks

Dr Jekyll

7,740 posts

147 months

[news] 
Sunday 7th March 2010 quote quote all
Manks said:
It is not a question of me "regarding" the interest rate as half the true rate. I am using the figure that will inevitably be quoted by the dealer in order to obtain the right answer.

Manks
No, it will be quoted by the dealer to make the rate sound lower than it really is. The fact that you have to double it to get the right answer is a clue.

Manks

7,725 posts

108 months

[news] 
Sunday 7th March 2010 quote quote all
Dr Jekyll said:
Manks said:
It is not a question of me "regarding" the interest rate as half the true rate. I am using the figure that will inevitably be quoted by the dealer in order to obtain the right answer.

Manks
No, it will be quoted by the dealer to make the rate sound lower than it really is. The fact that you have to double it to get the right answer is a clue.
Oh for sure. But the fact remains that you need to apply the flat rate once to the amortised part of the loan and twice to the deferred payment or bubble. Which is what I said originally.

Manks



Edited by Manks on Sunday 7th March 14:18

sidicks

6,177 posts

107 months

[news] 
Sunday 7th March 2010 quote quote all
Manks said:
Oh for sure. But the fact remains that you need to apply the flat rate once to the amortised part of the loan and twice to the deferred payment or bubble. Which is what I said and which you apparently disagreed with.

Manks
It's the same point as we are discussing on the other thread - if you use the 'proper' IRR calculation then you don't need to charge the (wrong) interest rate twice to get the right answer!!
smile
Sidicks


Manks

7,725 posts

108 months

[news] 
Sunday 7th March 2010 quote quote all
sidicks said:
Manks said:
Oh for sure. But the fact remains that you need to apply the flat rate once to the amortised part of the loan and twice to the deferred payment or bubble. Which is what I said and which you apparently disagreed with.

Manks
It's the same point as we are discussing on the other thread - if you use the 'proper' IRR calculation then you don't need to charge the (wrong) interest rate twice to get the right answer!!
smile
Sidicks
But if you do it your way, you get the WRONG answer as you have already demonstrated.

Manks

sidicks

6,177 posts

107 months

[news] 
Sunday 7th March 2010 quote quote all
Manks said:
But if you do it your way, you get the WRONG answer as you have already demonstrated.

Manks
No you don't!!

Why do you think you get the wrong answer?
confused
Sidicks

Manks

7,725 posts

108 months

[news] 
Sunday 7th March 2010 quote quote all
sidicks said:
Manks said:
But if you do it your way, you get the WRONG answer as you have already demonstrated.

Manks
No you don't!!

Why do you think you get the wrong answer?
confused
Sidicks
Because on page 1 of the other thread you assert:

sidicks said:
Ok, as has already been posted previously (hundreds of times), flat rate is meaningless, you need to use the APR to calculate the monthly payments, as this takes into account all fees etc.

With a £10k car and £1k deposit, there is £9k to finance. Effectively there are 2 parts to this agreement:
- A £5000 loan (residual) on which interest is paid but no capital
- A £4000 loan which is re-payable over 3 years

Using an APR of 8.8% (equivalent to a monthly rate of 0.71%):
The interest on the £5k loan is £35.27 per month
The interest and capital repayment on the £4k loan is £126.20

This leads to a total premium of £161.47
Whereas "RS6 see you", who is a car finance broker, inputted the figures into his PCP calculator and obtained the figure: £170.70 which also tallies with the answer calculating it manually.

So, your method has been demonstrated to give the incorrect answer.

But as I have said on the other thread I think it is time for me to draw a line under this. I have a car to wash and enjoy in the sunshine - and you know what it hasn't got any finance on it. wink

Manks


Edited by Manks on Sunday 7th March 14:31

johnfm

10,956 posts

136 months

[news] 
Sunday 7th March 2010 quote quote all
The 'calculation' is very very easy to create on excel.

For the example figures, if you pay £1000 deposit on day one and £170.69 per month with a £5k balloon, the APR is 8.71%.

Amount of loan 10000
admin fees 0
deposit 1000
monthly pmt 170.69
balloon 5000
eoc fees 0
interest rate 5%
no opf payments 36



total repaid 11144.84
total interest 1144.84


rough monthly pmt £170.69

IRR 0.698040092662%
APR 8.71

sidicks

6,177 posts

107 months

[news] 
Sunday 7th March 2010 quote quote all
Manks said:
Whereas "RS6 see you", who is a car finance broker, inputted the figures into his PCP calculator and obtained the figure: £170.70 which also tallies with the answer calculating it manually.

So, your method has been demonstrated to give the incorrect answer.
My number uses the APR, which as you have said is rounded down to the lower 0.1%. By definition the actual IRR (i.e. unrounded APR) will produce the correct answer. I was being a bit lazy when I was using referring to APR rather than IRR.

Given the full cashflows and a simple spreadsheet it is a trivial spreadsheet to tie up with the 'correct' answer.
smile
Sidicks

PS - My car needs a wash too!

text

1 posts

33 months

[news] 
Monday 16th January 2012 quote quote all
For anyone looking for a quick and dirty pcp calculator online, I have one that I created here http://www.pcpcal.co.uk/ It will let you see what happens when you change the APR, deposit, final payment etc.

I do not make any guarantees over it's accuracy although the model has always been within a few quid of the numbers from dealers quotes that I have had recently.

cailean

580 posts

59 months

[news] 
Monday 16th January 2012 quote quote all
Nice.
Or you could just save up and pay cash...sorry I couldn't resist....laugh
As you were
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