If you have any questions that are not answered below then please use the link below to get in touch.  We would also appreciate any other feedback that you have about the App, how you use it, or possible  improvements that we could make:

Give Feedback 

Target

This input at the top of the screen determines the variable that you are solving for.  The most common target is Payment (enter an Advance and the payment is calculated.  The next being Advance (enter a Payment and the total Advance that can be borrowed is calculated).

Advance

This the amount of the loan which is borrowed at the start of the credit agreement.

Deposit

Also known as a Downpayment, this the amount paid back by the borrower right at the start of the credit agreement.

Payment

Also known as an Installment, this the regular amount paid back by the borrower on a periodic basis over the term of the agreement.

Residual

This is the amount (remaining balance) the borrower still has to pay back at the end of the contract.  It is often settled by the sale of the asset or a single Balloon payment

Yield

Yield is the interest rate charged by the lender (funder).  It is the sum of the Cost Of Funds plus the Margin:

• Cost Of Funds - is the rate that the funder is charged or the borrowing cost faced by the lender.

• Margin - is the profit (spread) that that  lender wants to make on this loan

Compounding

Compounding frequency is how often the interest is calculated and added to the balance owed.  There are the following options:

• Daily - Interest is calculated and added to the balance outstanding every day. For example if the interest rate was 12% and the "Days In Year" was 360 then the interest calculated for one day would be: Interest = Balance x 0.12 /360

• Monthly - Interest is calculated and added to the balance outstanding every month.  The App allows two methods of compounding:

• Periodic - For example if the interest rate was 12% then the interest calculated for one month would be: Interest = Balance x 0.12 / 12 = Balance x 0.01

• Exact Days - For example if the interest rate was 12% and there were 31 days since the last month's compounding event, then the interest calculated for this month would be: Interest = Balance x 0.12 x 31 / 365 (if the "Days In Year" was set to 365)

• Quarterly - Interest is calculated and added to the balance outstanding every quarter.  The App allows two methods of compounding:

• Periodic - For example if the interest rate was 12% then the interest calculated for one quarter would be: Interest = Balance x 0.12 / 4 = Balance x 0.03

• Exact Days - For example if the interest rate was 12% and there were 91 days since the last quarter's compounding event, then the interest calculated for this quarter would be: Interest = Balance x 0.12 x 91 / 365 (if the "Days In Year" was set to 365)

• Semi-Annual - Interest is calculated and added to the balance outstanding every six months.  The App allows two methods of compounding:

  • Periodic - For example if the interest rate was 12% then the interest calculated for this half year would be: Interest = Balance x 0.12 / 2 = Balance x 0.06

  • Exact Days - For example if the interest rate was 12% and there were 181 days since the last half year's compounding event, then the interest calculated for this half year would be: Interest = Balance x 0.12 x 181 / 365 (if the "Days In Year" was set to 365)

• Annual - Interest is calculated and added to the balance outstanding every year.  The App allows two methods of compounding, although Exact Days for an Annual profile would be very unusual:

  • Periodic - For example if the interest rate was 12% then the interest calculated for this half year would be: Interest = Balance x 0.12

  • Exact Days - For example if the interest rate was 12% and there were 365 days since the last half year's compounding event, then the interest calculated for this half year would be: Interest = Balance x 0.12 x 365 / 360 (if the "Days In Year" was set to 360)

Profile

This section enables the user to configure the repayment profile of the agreement.

• Start Date - is the date that agreement starts.  Every future payment or compounding event date is a whole period in the future.  If the Start Date is the last day of a month then every future event date will be on the last day of a month.

• Initial Payments - Is the multiple of the normal payment which is to be paid on the start date.  It is very similar to the Deposit in that it is a payment made at the start of the agreement, but it is expressed as a multiple of the normal payment.

• Payment Frequency - Is how often the borrower has to make the regular payments (Monthly, Quarterly, Semi-Annual or Annual).  The App will not allow the Payments to be more frequent than the compounding frequency.  e.g. Quarterly Payments with Monthly Compounding is OK but Monthly Payments with Quarterly Compounding is not allowed.

• Initial Pause - Is the number of months from the start of the agreement to the first regular payment is made by the borrower.  The App will not allow the Initial Pause to be inconsistent with compounding frequency.  e.g. a 5 month Initial Pause with Monthly Compounding is OK but Quarterly Compounding would not be allowed.  A a 6 month Initial Pause is OK with Monthly or Quarterly or Semi-Annual Compounding.

• Regular Payments - Is the number of regular payments made by the borrower. i.e. the total number of payments minus any initial payments made.

• Terminal Pause -  Is the number of months from the last regular payment to the end of the agreement when any residual or end fee is paid by the borrower.  The App will not allow the Terminal Pause to be inconsistent with compounding frequency.  

Funder Cashflows

This section enables the user to configure cashflows paid out or received by the funder.  These cashflows are normally not visible to the borrower.

• Subsidy - This is the amount received by the funder from a vendor or manufacturing partner to reduce the cost of financing equipment to the borrower.  Subsidies will reduce the payment that the borrower makes.

• Commission - Is the amount paid by the funder to any intermediary (equipment dealer or broker) for arranging the credit agreement for the funder.  Commissions will increase the payment that the borrower makes.

• NPV - this read only field is the Net Present Value of the deal to the funder.  i.e. it is all positive cashflows minus all negative cashflows discounted using the Cost Of Funds.  In the App, it does not include any of the Fees.

Fees

This section enables the user to configure any administration fees charged by the funder.

• Start Fee - This fee is paid by the borrower on the Start Date.

• First Regular Fee - This fee is paid by the borrower with the first regular payment. i.e. after the Initial Pause.

• End Fee - This fee is paid by the borrower at the end of the agreement.