![]() ![]() Please use our Credit Card Calculator for more information or to do calculations involving credit cards, or our Credit Cards Payoff Calculator to schedule a financially feasible way to pay off multiple credit cards. They are an example of revolving debt, where the outstanding balance can be carried month-to-month, and the amount repaid each month can be varied. It is possible to see this in action on the amortization table.Ĭredit cards, on the other hand, are generally not amortized. Interest is computed on the current amount owed and thus will become progressively smaller as the principal decreases. A part of the payment covers the interest due on the loan, and the remainder of the payment goes toward reducing the principal amount owed. When a borrower takes out a mortgage, car loan, or personal loan, they usually make monthly payments to the lender these are some of the most common uses of amortization. The two are explained in more detail in the sections below. The second is used in the context of business accounting and is the act of spreading the cost of an expensive and long-lived item over many periods. The first is the systematic repayment of a loan over time. There are two general definitions of amortization. TValue is the perfect program for these calculations to determine the rate factor and to calculate either the interest rate or yield on the deal.While the Amortization Calculator can serve as a basic tool for most, if not all, amortization calculations, there are other calculators available on this website that are more specifically geared for common amortization calculations. As you can see, there can be numerous variations depending on the variables. Generally, when leasing companies build their lease rate factor matrix, they will do one for different interest rates, for different terms, and for different deal structures. Here is the calculation in TValue 6 with two payments in advance to determine the rate factor. If you factor in residuals, you will change the payments and rate factor again. With one payment in arrears, your payments would be $2,124.70 or a rate factor of. With one payment in advance, your payments would be $2,107.14 or a rate factor of. With two payments in advance, your payments would be $2,090.09 or a rate factor of. ![]() We will not factor in a residual for this example to keep it simple. Let’s assume a $100,000 lease at 10% for 60 months with one payment in advance, two payments in advance, and payments in arrears. Here's an example that illustrates how the lease rate factor can change. What about a residual? If you have a residual of 5% or 10% it will also affect the lease rate factor. Do you have a payment or two in advance or do you have payments in arrears? These assumptions will change the payment and thus the lease rate factor. If you wanted to develop a series of lease rate factors, you would create a lease of $100,000 for example, with an interest rate of 10% over 5 years, and then build a matrix based on the deal structures. It is important to understand that the lease rate factor is not an interest rate, but it is derived from the cash flows based on an interest rate or a yield. ![]() The lease rate factor is a seemingly simplistic way of getting the payments but it is more complex than it appears. Stated another way, if you multiply the lease rate factor by the cost of the leased equipment, you will determine the regular payment amount. Have you ever been quoted a “lease factor” and you don’t know what it means? A lease rate factor is the regular lease payment as a percentage of the total cost of the leased equipment. ![]()
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