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March 6th, 2015, 01:11 AM   #1
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Car Finance PCP Calculation

Hi All,

I am new to this forum.....

I have come across the Car Finance PCP calculation in a website. I have given the example in the attachment. If I calculate the interest, it doesn't match with theirs one. I am puzzled..... Anyone can help please? Thanks in advance.....

Regards,
KMOthpur...
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File Type: jpg Car PCP Example1.JPG (33.7 KB, 7 views)
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March 6th, 2015, 08:18 PM   #2
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This is what it'll look like, in Bank statement format:
Code:
MONTH  PAYMENT    INTEREST    BALANCE
 00                                          18,280.00
 01        -361.50         87.53     18,006.03
 02        -361.50         86.22     17,730.75
...
 29        -361.50         48.32       9,778.73
 30        -361.50         46.83       9,464.06
 31                             45.32      9,509.38 : optional final pay't
                            ======
 Total interest:       2,074.38
The 5.9% APR is converted to it's monthly equivalent:
(1 + i)^12 = 1.059
i = .004788517365.....

18280 * .004788... = 87.53 (see 1st month's interest above)

OK?
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March 9th, 2015, 05:54 AM   #3
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Wow....Excellent..... Thanks a lot Denis...

One final question.... How do they calculate 3.04% p.a.????

Regards,
kmothpur.
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March 9th, 2015, 06:18 AM   #4
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Got no idea why that rate is shown...it is not used.
(1+.059/12)^12 = 1.0606
1.0304^2 = 1.0617
Seems to be the semi-annual equivalent rate (or close to)
to the 5.9% cpd monthly...but that's a wild guess!

Can you ask the car dealer what it means;
I'd like to know...

You guys in the UK always seem to come up with weird stuff
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March 9th, 2015, 06:46 AM   #5
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....

But sure... I ask them and let you know...... It will take a while but I will post....

Anyway, thanks Denis.....

Regards,
kmothpur.
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