Discussion:
Setting a car loan
Andy Pastuszak
2015-02-21 15:36:07 UTC
Permalink
I tried to set up my car loan in Gnucash and the calculated monthly payment
doesn't match what the bank says I owe. Gnucash says the monthly payment
should be $294.78, but the bank makes me pay $299.11.

Thing is, I put the loan into other financial software and also comes up
with $294.78. So, it's obviously not the math that Gnucash is doing to
calculate the payments.

Is there some way to deal with this situation? Am I just stuck entering
transactions manually?

The loan has 61 payments, and I am thinking that payment 61 is probably not
a full payment and that's screwing up the math.

Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
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Maf. King
2015-02-21 15:49:45 UTC
Permalink
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly payment
doesn't match what the bank says I owe. Gnucash says the monthly payment
should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes up
with $294.78. So, it's obviously not the math that Gnucash is doing to
calculate the payments.
Is there some way to deal with this situation? Am I just stuck entering
transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is probably not
a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
IMHO, it doesn't matter what GC or any other software says - the agreement
with the bank is what is going to happen. A few quid per month either way is
close enough to confirm the bank are not overcharging - it all depends on when
they apply the interest, and if interest is charged on the applied interest
etc....

I would just schedule 61 payments in the SX subsystem, according to the
lendor's schedule, and reconcile periodically that the loan agreement is being
honoured.

If the final payment is less, well you have a few £ extra that month - you'll
spot it quickly when you reconcile the bank account - and then a one-off
manual adjustment is made...

0.02
Maf.


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Paul Warthe
2015-02-21 16:08:25 UTC
Permalink
I agree with Maf.

A few years ago my office tried to create a loan tracking program to match one our funder was trying to get us to use (it had numerous deficiencies in other areas that caused working with it to be a nightmare). After trying numerous other pre-packaged loan programs, researching and trying several formulas, we could not match the formula used in the tracking program our funder provided. We came close, but for our needs we were required to be spot on with what the funder's program would produce.

Paul

-----Original Message-----
From: gnucash-user [mailto:gnucash-user-bounces+warthes7=***@gnucash.org] On Behalf Of Maf. King
Sent: Saturday, February 21, 2015 9:50 AM
To: gnucash-***@gnucash.org
Subject: Re: Setting a car loan
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly
payment doesn't match what the bank says I owe. Gnucash says the
monthly payment should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes
up with $294.78. So, it's obviously not the math that Gnucash is
doing to calculate the payments.
Is there some way to deal with this situation? Am I just stuck
entering transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is
probably not a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
IMHO, it doesn't matter what GC or any other software says - the agreement with the bank is what is going to happen. A few quid per month either way is close enough to confirm the bank are not overcharging - it all depends on when they apply the interest, and if interest is charged on the applied interest etc....

I would just schedule 61 payments in the SX subsystem, according to the lendor's schedule, and reconcile periodically that the loan agreement is being honoured.

If the final payment is less, well you have a few £ extra that month - you'll spot it quickly when you reconcile the bank account - and then a one-off manual adjustment is made...

0.02
Maf.


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Andy Pastuszak
2015-02-21 16:13:08 UTC
Permalink
Thank you everyone. I will do just that. Going to stop by a bank
branch and pick up an amortization table from them and then adjust
monthly. It seems bank math and real math are two different things.

Andy
Post by Paul Warthe
I agree with Maf.
A few years ago my office tried to create a loan tracking program to match one our funder was trying to get us to use (it had numerous deficiencies in other areas that caused working with it to be a nightmare). After trying numerous other pre-packaged loan programs, researching and trying several formulas, we could not match the formula used in the tracking program our funder provided. We came close, but for our needs we were required to be spot on with what the funder's program would produce.
Paul
-----Original Message-----
Sent: Saturday, February 21, 2015 9:50 AM
Subject: Re: Setting a car loan
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly
payment doesn't match what the bank says I owe. Gnucash says the
monthly payment should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes
up with $294.78. So, it's obviously not the math that Gnucash is
doing to calculate the payments.
Is there some way to deal with this situation? Am I just stuck
entering transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is
probably not a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
IMHO, it doesn't matter what GC or any other software says - the agreement with the bank is what is going to happen. A few quid per month either way is close enough to confirm the bank are not overcharging - it all depends on when they apply the interest, and if interest is charged on the applied interest etc....
I would just schedule 61 payments in the SX subsystem, according to the lendor's schedule, and reconcile periodically that the loan agreement is being honoured.
If the final payment is less, well you have a few £ extra that month - you'll spot it quickly when you reconcile the bank account - and then a one-off manual adjustment is made...
0.02
Maf.
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David Carlson
2015-02-21 16:46:54 UTC
Permalink
Post by Andy Pastuszak
Thank you everyone. I will do just that. Going to stop by a bank
branch and pick up an amortization table from them and then adjust
monthly. It seems bank math and real math are two different things.
Andy
Post by Paul Warthe
I agree with Maf.
A few years ago my office tried to create a loan tracking program to
match one our funder was trying to get us to use (it had numerous
deficiencies in other areas that caused working with it to be a
nightmare). After trying numerous other pre-packaged loan programs,
researching and trying several formulas, we could not match the
formula used in the tracking program our funder provided. We came
close, but for our needs we were required to be spot on with what the
funder's program would produce.
Paul
-----Original Message-----
From: gnucash-user
Behalf Of Maf. King
Sent: Saturday, February 21, 2015 9:50 AM
Subject: Re: Setting a car loan
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly
payment doesn't match what the bank says I owe. Gnucash says the
monthly payment should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes
up with $294.78. So, it's obviously not the math that Gnucash is
doing to calculate the payments.
Is there some way to deal with this situation? Am I just stuck
entering transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is
probably not a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
IMHO, it doesn't matter what GC or any other software says - the
agreement with the bank is what is going to happen. A few quid per
month either way is close enough to confirm the bank are not
overcharging - it all depends on when they apply the interest, and if
interest is charged on the applied interest etc....
I would just schedule 61 payments in the SX subsystem, according to
the lendor's schedule, and reconcile periodically that the loan
agreement is being honoured.
If the final payment is less, well you have a few £ extra that month
- you'll spot it quickly when you reconcile the bank account - and
then a one-off manual adjustment is made...
0.02
Maf.
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I seem to recall that some banks start the interest clock right away but
do not require a payment until 45 or 60 days after the loan is
initiated. The effect is about the same as if you calculated a new loan
amount larger than what they financed by the interest accumulated during
that delay.

Try changing the loan value upward by about half of the first month's
interest and the start date to 30 days before the first payment is due.
You will probably see the exact values in the amortization table that
they give you.

David C
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You can do this by u
Andy Pastuszak
2015-02-21 17:11:53 UTC
Permalink
I'll try that as soon as I get an amortization table. I never got one
with my initial paperwork. For that matter, I never even got the name
of the bank. I had to call the dealership to get the name of the bank,
and then call the bank to find out where to make the payment. My "truth
in lending" statement had the dealership listed as the "bank" and just
showed the total amount financed, the interest rate and the monthly payment.

Andy
Post by David Carlson
Post by Andy Pastuszak
Thank you everyone. I will do just that. Going to stop by a bank
branch and pick up an amortization table from them and then adjust
monthly. It seems bank math and real math are two different things.
Andy
Post by Paul Warthe
I agree with Maf.
A few years ago my office tried to create a loan tracking program to
match one our funder was trying to get us to use (it had numerous
deficiencies in other areas that caused working with it to be a
nightmare). After trying numerous other pre-packaged loan programs,
researching and trying several formulas, we could not match the
formula used in the tracking program our funder provided. We came
close, but for our needs we were required to be spot on with what the
funder's program would produce.
Paul
-----Original Message-----
From: gnucash-user
Behalf Of Maf. King
Sent: Saturday, February 21, 2015 9:50 AM
Subject: Re: Setting a car loan
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly
payment doesn't match what the bank says I owe. Gnucash says the
monthly payment should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes
up with $294.78. So, it's obviously not the math that Gnucash is
doing to calculate the payments.
Is there some way to deal with this situation? Am I just stuck
entering transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is
probably not a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
IMHO, it doesn't matter what GC or any other software says - the
agreement with the bank is what is going to happen. A few quid per
month either way is close enough to confirm the bank are not
overcharging - it all depends on when they apply the interest, and if
interest is charged on the applied interest etc....
I would just schedule 61 payments in the SX subsystem, according to
the lendor's schedule, and reconcile periodically that the loan
agreement is being honoured.
If the final payment is less, well you have a few £ extra that month
- you'll spot it quickly when you reconcile the bank account - and
then a one-off manual adjustment is made...
0.02
Maf.
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I seem to recall that some banks start the interest clock right away but
do not require a payment until 45 or 60 days after the loan is
initiated. The effect is about the same as if you calculated a new loan
amount larger than what they financed by the interest accumulated during
that delay.
Try changing the loan value upward by about half of the first month's
interest and the start date to 30 days before the first payment is due.
You will probably see the exact values in the amortization table that
they give you.
David C
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Edward Doolittle
2015-02-22 00:12:24 UTC
Permalink
Regarding amortization tables: My experience with my bank is that they were
reluctant to make predictions about the outstanding balance or amount of
interest paid for each payment. It may be that the loan officer didn't
understand my request (perhaps I didn't have the necessary vocabulary) but
I think the reality is they don't like making predictions. It's easy to
write a program to run every business day to update the loan status (i.e.,
if the date is on or after the date when we're supposed to loot Charlie's
account and we haven't looted it yet this month, then loot it right now and
calculate how much of the payment goes to interest and how much to
principal reduction). It's much harder to write a program to predict those
things in the future because of holidays.

The problem isn't just one of computation; new holidays could be introduced
during the lifetime of the loan. E.g., "Family Day" was introduced by
legislation in Saskatchewan in 2007 (
http://www.timeanddate.com/holidays/canada/family-day), doubtless without 5
years of lead time for the banks to prepare. That would mess up loan
predictions.

I'm guessing the bank would not want to be held to a prediction, given the
uncertainty of the future. Better just to keep track of how much is owed
and recalculate each payment. It's easy to develop an approximate
amortization table with a little bit of math or a calculator or a
spreadsheet or whatever. But because of rounding errors and irregularities
in the payment dates, those tables will be off by a small amount, which
could undermine confidence and even lead to lawsuits.

The bank will, on the other hand, comply quickly if you ask for a statement
of account which gives info about past activities.

Perhaps my experience is peculiar to Canada. I've never understood, for
instance, why electronic banking in Canada can't just go on during weekends
and holidays, and why it could take 3 business days (which could be 6
days!) for my electronic bill payments to arrive, even though they depart
instantaneously. I imagine some wizened old bankers in the basement
printing out my payment requests and dropping them in a pneumatic tube ...
Post by Andy Pastuszak
I'll try that as soon as I get an amortization table. I never got one
with my initial paperwork. For that matter, I never even got the name of
the bank. I had to call the dealership to get the name of the bank, and
then call the bank to find out where to make the payment. My "truth in
lending" statement had the dealership listed as the "bank" and just showed
the total amount financed, the interest rate and the monthly payment.
Andy
Post by David Carlson
Post by Andy Pastuszak
Thank you everyone. I will do just that. Going to stop by a bank
branch and pick up an amortization table from them and then adjust
monthly. It seems bank math and real math are two different things.
Andy
Post by Paul Warthe
I agree with Maf.
A few years ago my office tried to create a loan tracking program to
match one our funder was trying to get us to use (it had numerous
deficiencies in other areas that caused working with it to be a
nightmare). After trying numerous other pre-packaged loan programs,
researching and trying several formulas, we could not match the
formula used in the tracking program our funder provided. We came
close, but for our needs we were required to be spot on with what the
funder's program would produce.
Paul
-----Original Message-----
From: gnucash-user
Behalf Of Maf. King
Sent: Saturday, February 21, 2015 9:50 AM
Subject: Re: Setting a car loan
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly
payment doesn't match what the bank says I owe. Gnucash says the
monthly payment should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes
up with $294.78. So, it's obviously not the math that Gnucash is
doing to calculate the payments.
Is there some way to deal with this situation? Am I just stuck
entering transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is
probably not a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
IMHO, it doesn't matter what GC or any other software says - the
agreement with the bank is what is going to happen. A few quid per
month either way is close enough to confirm the bank are not
overcharging - it all depends on when they apply the interest, and if
interest is charged on the applied interest etc....
I would just schedule 61 payments in the SX subsystem, according to
the lendor's schedule, and reconcile periodically that the loan
agreement is being honoured.
If the final payment is less, well you have a few £ extra that month
- you'll spot it quickly when you reconcile the bank account - and
then a one-off manual adjustment is made...
0.02
Maf.
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I seem to recall that some banks start the interest clock right away but
do not require a payment until 45 or 60 days after the loan is
initiated. The effect is about the same as if you calculated a new loan
amount larger than what they financed by the interest accumulated during
that delay.
Try changing the loan value upward by about half of the first month's
interest and the start date to 30 days before the first payment is due.
You will probably see the exact values in the amortization table that
they give you.
David C
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--
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
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Liz
2015-02-22 04:04:03 UTC
Permalink
On Sat, 21 Feb 2015 18:12:24 -0600
Post by Edward Doolittle
Perhaps my experience is peculiar to Canada. I've never understood,
for instance, why electronic banking in Canada can't just go on
during weekends and holidays, and why it could take 3 business days
(which could be 6 days!) for my electronic bill payments to arrive,
even though they depart instantaneously. I imagine some wizened old
bankers in the basement printing out my payment requests and dropping
them in a pneumatic tube ...
Same in Australia. For some reason the paying out of money can't occur
unless the wheezy old gentlemen are there to count it out.

We, in this part of the world, think it is actually bankers playing
with the cash on the short term money market, making heaps of cash
instead of handing it over promptly.

So Paypal pays straight away, any day, any time.
Eftpos is transferred about midnight, every day (that's when our
machine prints out a "settlement")
Bpay (electronic banking transfer) takes about 3 days to arrive at the
account. http://bpay.com.au/


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R. Victor Klassen
2015-02-23 02:11:27 UTC
Permalink
Post by Edward Doolittle
Perhaps my experience is peculiar to Canada. I've never understood, for
instance, why electronic banking in Canada can't just go on during weekends
and holidays, and why it could take 3 business days (which could be 6
days!) for my electronic bill payments to arrive, even though they depart
instantaneously. I imagine some wizened old bankers in the basement
printing out my payment requests and dropping them in a pneumatic tube ...
It is not peculiar to Canada. In fact it is peculiar to your institution. Before I moved back from the US a few years ago, the bank had a variable (but published) number of days, which they guaranteed - meaning they paid any overdue fees if they failed to keep the guarantee. The number of days depended on how they were linked to the recipient. In the worst case they would actually mail the payment - saving me the stamp, and possibly saving themselves a little in processing fees, as their payment draft was guaranteed scannable by the automated systems. In the best case it would be next day - or maybe even same day (likely if the recipient was their client). In this way they permitted me to pay ANYONE, provided I could give them a valid address. I suspect that if the recipient was an institution - not an individual or small business - and the bank didn’t have a relationship with them, they might attempt to establish one, or learn the routing to make it entirely electronic if they had enough transfers to the same recipient.

Now I am back in Canada and the Credit Union (and I expect most/all in Ontario) allows me to electronically pay only bills from a list of their making. But payments may be made instantly 24 hours a day, 7 days a week, including holidays.

Email transfer can go to anyone, and provided they have an account with a participating institution, it is as fast as you can send email, and the recipient read it and sign onto their internet banking account. But I believe there is a charge to the sender for this service - little or no opportunity for the bank to make money on the funds in transit.
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Liz
2015-02-21 22:18:22 UTC
Permalink
On Sat, 21 Feb 2015 11:13:08 -0500
Post by Andy Pastuszak
Thank you everyone. I will do just that. Going to stop by a bank
branch and pick up an amortization table from them and then adjust
monthly. It seems bank math and real math are two different things.
Andy
There are recorded examples of banks not doing the maths correctly.
This is simply the first example I found, not chosen for any specific
purpose.
http://www.australianbankingfinance.com/banking/asic-fines-nab-s-not-for-profit-partner/
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jcard21 xxxxxxx
2015-02-21 16:17:58 UTC
Permalink
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly payment
doesn't match what the bank says I owe. Gnucash says the monthly payment
should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes up
with $294.78. So, it's obviously not the math that Gnucash is doing to
calculate the payments.
Is there some way to deal with this situation? Am I just stuck entering
transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is probably not
a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
Would you give us the following missing loan info:

• Loan Principle Value $
• Loan Duration (number of years)
• Loan Interest Rate %
• Your Payment Frequency (monthly?)
• Bank's Required Monthly Payment Amount $299.11

Thanks.
--
jcard21

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Andy Pastuszak
2015-02-21 17:08:43 UTC
Permalink
• Loan Principle Value $16,261.32
• Loan Duration (number of years) 5 years (61 payments)
• Loan Interest Rate 3.89%
• Your Payment Frequency (monthly?) monthly
• Bank's Required Monthly Payment Amount $299.11

Car was purchased on 12/22/2014. First payment was due on 2/5/2015.
Post by jcard21 xxxxxxx
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly payment
doesn't match what the bank says I owe. Gnucash says the monthly payment
should be $294.78, but the bank makes me pay $299.11.
Thing is, I put the loan into other financial software and also comes up
with $294.78. So, it's obviously not the math that Gnucash is doing to
calculate the payments.
Is there some way to deal with this situation? Am I just stuck entering
transactions manually?
The loan has 61 payments, and I am thinking that payment 61 is probably not
a full payment and that's screwing up the math.
Is there a way to deal with loans that have a final payment that is
different from all the others when trying to schedule payments?
• Loan Principle Value $
• Loan Duration (number of years)
• Loan Interest Rate %
• Your Payment Frequency (monthly?)
• Bank's Required Monthly Payment Amount $299.11
Thanks.
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You can do this b
jcard21 xxxxxxx
2015-02-21 18:00:53 UTC
Permalink
Post by Andy Pastuszak
• Loan Principle Value $16,261.32
• Loan Duration (number of years) 5 years (61 payments)
• Loan Interest Rate 3.89%
• Your Payment Frequency (monthly?) monthly
• Bank's Required Monthly Payment Amount $299.11
Car was purchased on 12/22/2014. First payment was due on 2/5/2015.
Using your figures ($16,261.32 principle, 61 months, 3.89%) , I get a
monthly payment of $294.23 (using my Texas Instruments BA-II financial
calculator.)

Using 60 months, I get a monthly payment of $298.67, a lot closer to
the dealer's amount.

Could you and the dealer have included any other fees (motor vehicle
registration, under-body weatherproofing, etc) totaling $269.46 on top
of your loan principle of $16,261.32, so your actual/real loan
principle would be the $16,530.78 ?

A Loan Principle of $16,530.78 would give you a monthly payment of $299.11?

I'd go back to the dealer and politely ask them to explain why your
calculated monthly payment doesn't equal their monthly payment of
$299.11.

I'd start by verifying with the dealer the number of months/payments
(60 or 61), and I'd verify the Loan Principle ($16,261.32 or
16,530.78).

I hope this helps.
--
jcard21

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Y
Andy Pastuszak
2015-02-21 18:28:55 UTC
Permalink
Thank you. That does help.
Post by jcard21 xxxxxxx
Post by Andy Pastuszak
• Loan Principle Value $16,261.32
• Loan Duration (number of years) 5 years (61 payments)
• Loan Interest Rate 3.89%
• Your Payment Frequency (monthly?) monthly
• Bank's Required Monthly Payment Amount $299.11
Car was purchased on 12/22/2014. First payment was due on 2/5/2015.
Using your figures ($16,261.32 principle, 61 months, 3.89%) , I get a
monthly payment of $294.23 (using my Texas Instruments BA-II financial
calculator.)
Using 60 months, I get a monthly payment of $298.67, a lot closer to
the dealer's amount.
Could you and the dealer have included any other fees (motor vehicle
registration, under-body weatherproofing, etc) totaling $269.46 on top
of your loan principle of $16,261.32, so your actual/real loan
principle would be the $16,530.78 ?
A Loan Principle of $16,530.78 would give you a monthly payment of $299.11?
I'd go back to the dealer and politely ask them to explain why your
calculated monthly payment doesn't equal their monthly payment of
$299.11.
I'd start by verifying with the dealer the number of months/payments
(60 or 61), and I'd verify the Loan Principle ($16,261.32 or
16,530.78).
I hope this helps.
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Y
Edward Doolittle
2015-02-21 19:50:08 UTC
Permalink
I had a similar issue last year. I requested a Statement of Account for my
car loan from my bank and it was all over the place. Very disturbing to my
mathematical mind. So I sat down to try to understand it. What I found was:

- My bank continually shifts the actual payment date ahead from the nominal
date by a few days so that the payment date does not fall on weekends or
holidays.
- My bank counts the number of days between payments, divides by 365,
multiplies by the APR, and multiplies by the outstanding balance to
calculate the interest.
- My bank rounds that number, adds to the outstanding balance, and
subtracts my payment to determine the new balance each period.
- Even when I mirrored those calculations, my calculations differed from
those of the bank by plus or minus one cent ($0.01) about four times per
year. I can't explain the discrepancy yet, so I add a correction (of -0.01,
0.00, or 0.01) to each loan calculation which I used to compensate for the
discrepancy.

Mathematical formulas based on geometric series are nice, but you should
keep in mind that they are only an approximation to what the bank does. If
you're going to try to mirror what the bank does, for accurate bookkeeping,
you'll really have to use a spreadsheet instead.

It isn't hard to set up a spreadsheet with the basic features. I did one
for Andy in a few minutes here:
https://docs.google.com/spreadsheets/d/1LWOGrwNpHNa6Qf68J6FDAc5KchXHjV-G4Dnp64tKRaw/edit?usp=sharing
. The first row of the spreadsheet is irregular, so I had to enter the
second row also by hand, then just copied that row and pasted up to row 61.
Note that I did not include a Date Correction column to shift the date
ahead to avoid weekends or holidays. It's not that hard to figure out a
formula to place in the Date Correction column to move the date ahead to
avoid weekends; I could share my formula for that if anyone is interested.
It is harder to avoid holidays; if you really need to do that I suggest a
manual correction to the Date Correction column to offset the date; maybe
it could be automated using a table lookup. I didn't put any date
correction columns into Andy's spreadsheet because I don't know whether
they're relevant.

When I got the spreadsheet for my car loan more or less correct with date
corrections and 1 cent rounding(?) corrections, I entered the data into
GnuCash as transactions crediting Liabilities:Loans:Car and debiting
Expenses:Interest:Car. The next time I get a statement of account, I will
reconcile it against Liabilities:Loans:Car and will likely have to make a
few more 1 or 2 cent corrections. (I can make them on my spreadsheet too,
then update my future predictions in GnuCash, but that's not really
necessary and means I would have to modify a whole bunch of predictions I
had entered into GnuCash each time I received an updated statement.)

Anyway, back to Andy's question. Something does indeed seem to be wrong. 61
payments is too much. 60 payments is probably exactly right. However, there
may be some explanation. I think that the bank may round down when it
calculates the monthly payment; in that case there will be a small payment
#61 that is less than the normal payment. (My spreadsheet shows $0.20
balance after payment 60 is made.) The bank may tell you 61 payments
because A) the last is technically a payment no matter how small, and B)
they want you to make sure you have funds to cover the last partial
payment.

Saying 61 payments could conceivably be just a way for them to avoid the
error-prone calculation that I attempted to do in my spreadsheet. It's
really hard to predict holidays by formula, particularly Easter, so the
bank just covers its donkey by warning you of an extra payment that may or
may not be significant.

The ultimate arbiter of the loan is the bank's Statement of Account. You
should get in touch with your bank/loan officer and get periodic statements
sent to you. Every month is probably not necessary, but an initial
statement and then at least once at the beginning of the year would be
helpful.
Post by Andy Pastuszak
Thank you. That does help.
Post by jcard21 xxxxxxx
Post by Andy Pastuszak
• Loan Principle Value $16,261.32
• Loan Duration (number of years) 5 years (61 payments)
• Loan Interest Rate 3.89%
• Your Payment Frequency (monthly?) monthly
• Bank's Required Monthly Payment Amount $299.11
Car was purchased on 12/22/2014. First payment was due on 2/5/2015.
Using your figures ($16,261.32 principle, 61 months, 3.89%) , I get a
monthly payment of $294.23 (using my Texas Instruments BA-II financial
calculator.)
Using 60 months, I get a monthly payment of $298.67, a lot closer to
the dealer's amount.
Could you and the dealer have included any other fees (motor vehicle
registration, under-body weatherproofing, etc) totaling $269.46 on top
of your loan principle of $16,261.32, so your actual/real loan
principle would be the $16,530.78 ?
A Loan Principle of $16,530.78 would give you a monthly payment of $299.11?
I'd go back to the dealer and politely ask them to explain why your
calculated monthly payment doesn't equal their monthly payment of
$299.11.
I'd start by verifying with the dealer the number of months/payments
(60 or 61), and I'd verify the Loan Principle ($16,261.32 or
16,530.78).
I hope this helps.
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https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
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You can do this by using Reply-To-List or Reply-All.
--
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
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You can do this by
Andy Pastuszak
2015-02-21 19:53:07 UTC
Permalink
Thank you everyone! You help has been amazing!

On Sat, Feb 21, 2015 at 2:50 PM, Edward Doolittle <
Post by Edward Doolittle
I had a similar issue last year. I requested a Statement of Account for my
car loan from my bank and it was all over the place. Very disturbing to my
- My bank continually shifts the actual payment date ahead from the
nominal date by a few days so that the payment date does not fall on
weekends or holidays.
- My bank counts the number of days between payments, divides by 365,
multiplies by the APR, and multiplies by the outstanding balance to
calculate the interest.
- My bank rounds that number, adds to the outstanding balance, and
subtracts my payment to determine the new balance each period.
- Even when I mirrored those calculations, my calculations differed from
those of the bank by plus or minus one cent ($0.01) about four times per
year. I can't explain the discrepancy yet, so I add a correction (of -0.01,
0.00, or 0.01) to each loan calculation which I used to compensate for the
discrepancy.
Mathematical formulas based on geometric series are nice, but you should
keep in mind that they are only an approximation to what the bank does. If
you're going to try to mirror what the bank does, for accurate bookkeeping,
you'll really have to use a spreadsheet instead.
It isn't hard to set up a spreadsheet with the basic features. I did one
https://docs.google.com/spreadsheets/d/1LWOGrwNpHNa6Qf68J6FDAc5KchXHjV-G4Dnp64tKRaw/edit?usp=sharing
. The first row of the spreadsheet is irregular, so I had to enter the
second row also by hand, then just copied that row and pasted up to row 61.
Note that I did not include a Date Correction column to shift the date
ahead to avoid weekends or holidays. It's not that hard to figure out a
formula to place in the Date Correction column to move the date ahead to
avoid weekends; I could share my formula for that if anyone is interested.
It is harder to avoid holidays; if you really need to do that I suggest a
manual correction to the Date Correction column to offset the date; maybe
it could be automated using a table lookup. I didn't put any date
correction columns into Andy's spreadsheet because I don't know whether
they're relevant.
When I got the spreadsheet for my car loan more or less correct with date
corrections and 1 cent rounding(?) corrections, I entered the data into
GnuCash as transactions crediting Liabilities:Loans:Car and debiting
Expenses:Interest:Car. The next time I get a statement of account, I will
reconcile it against Liabilities:Loans:Car and will likely have to make a
few more 1 or 2 cent corrections. (I can make them on my spreadsheet too,
then update my future predictions in GnuCash, but that's not really
necessary and means I would have to modify a whole bunch of predictions I
had entered into GnuCash each time I received an updated statement.)
Anyway, back to Andy's question. Something does indeed seem to be wrong.
61 payments is too much. 60 payments is probably exactly right. However,
there may be some explanation. I think that the bank may round down when it
calculates the monthly payment; in that case there will be a small payment
#61 that is less than the normal payment. (My spreadsheet shows $0.20
balance after payment 60 is made.) The bank may tell you 61 payments
because A) the last is technically a payment no matter how small, and B)
they want you to make sure you have funds to cover the last partial
payment.
Saying 61 payments could conceivably be just a way for them to avoid the
error-prone calculation that I attempted to do in my spreadsheet. It's
really hard to predict holidays by formula, particularly Easter, so the
bank just covers its donkey by warning you of an extra payment that may or
may not be significant.
The ultimate arbiter of the loan is the bank's Statement of Account. You
should get in touch with your bank/loan officer and get periodic statements
sent to you. Every month is probably not necessary, but an initial
statement and then at least once at the beginning of the year would be
helpful.
Post by Andy Pastuszak
Thank you. That does help.
Post by jcard21 xxxxxxx
Post by Andy Pastuszak
• Loan Principle Value $16,261.32
• Loan Duration (number of years) 5 years (61 payments)
• Loan Interest Rate 3.89%
• Your Payment Frequency (monthly?) monthly
• Bank's Required Monthly Payment Amount $299.11
Car was purchased on 12/22/2014. First payment was due on 2/5/2015.
Using your figures ($16,261.32 principle, 61 months, 3.89%) , I get a
monthly payment of $294.23 (using my Texas Instruments BA-II financial
calculator.)
Using 60 months, I get a monthly payment of $298.67, a lot closer to
the dealer's amount.
Could you and the dealer have included any other fees (motor vehicle
registration, under-body weatherproofing, etc) totaling $269.46 on top
of your loan principle of $16,261.32, so your actual/real loan
principle would be the $16,530.78 ?
A Loan Principle of $16,530.78 would give you a monthly payment of $299.11?
I'd go back to the dealer and politely ask them to explain why your
calculated monthly payment doesn't equal their monthly payment of
$299.11.
I'd start by verifying with the dealer the number of months/payments
(60 or 61), and I'd verify the Loan Principle ($16,261.32 or
16,530.78).
I hope this helps.
_______________________________________________
gnucash-user mailing list
https://lists.gnucash.org/mailman/listinfo/gnucash-user
-----
Please remember to CC this list on all your replies.
You can do this by using Reply-To-List or Reply-All.
--
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2
« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI
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gnucash-***@gnucash.org
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-----
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You can do this
Mike or Penny Novack
2015-02-21 19:45:53 UTC
Permalink
Post by Andy Pastuszak
• Your Payment Frequency (monthly?) monthly
• Bank's Required Monthly Payment Amount $299.11
Car was purchased on 12/22/2014. First payment was due on 2/5/2015.
Post by Andy Pastuszak
I tried to set up my car loan in Gnucash and the calculated monthly payment
doesn't match what the bank says I owe. Gnucash says the monthly payment
should be $294.78, but the bank makes me pay $299.11.
And there you have it (the explanation you got before "sometimes the
banks..."

HOW did you set up the program's amortization to account for the extra
days in that first "month"? I bet you didn't. In fact, I doubt the
programs even offered doing the calculation for 60 monthly payments
preceded by one of 45 days. As suggested, try increasing the loan
principle by the interest for those extra 15 days (12/22 to /1/5). Rerun
the program's amortization with that new amount and see if you don't
come up with a payment closer to what the bank has.

But you STILL may need to adjust because there isn't one "right" way to
do the amortization schedule. However that should be just a few cents
one way or the other with the difference made up for in the final
payment. A matter of how "rounding" is done.

Michael D Novack
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