Professional Calculation Methodology
Professional Features: Our calculator uses row-by-row rounding to the nearest penny, dynamic frequency support, schedule-driven totals, and full FCA compliance for UK consumer credit regulations.
1. Row-by-Row Rounding (UK Standard)
Rounding Function: roundToPence(amount) = Math.round(amount × 100) / 100
Every monetary calculation is rounded to the nearest penny before being used in subsequent calculations:
- VAT Calculations: 20% VAT is rounded individually
- Payment Schedule: Each payment row is rounded before updating balance
- Totals: All totals are calculated from rounded schedule values
- Accuracy: Eliminates penny-level drift across the entire agreement term
2. Dynamic Frequency Support
Frequency Settings Function
The calculator automatically adjusts calculations based on payment frequency:
Monthly: 12 periods per year, 30-day periods
Fortnightly: 26 periods per year, 14-day periods
Weekly: 52 periods per year, 7-day periods
Formula: Period Rate = Annual Rate ÷ Periods Per Year
Formula: Number of Periods = Math.ceil((Agreement Term ÷ 12) × Periods Per Year)
3. Amount of Credit Calculation
Our calculator follows the standard UK car finance calculation process with row-by-row rounding:
Step 1: Total Vehicle Cost
Total Cost = Vehicle Price (OTR) + Documentation Fee
- Vehicle Price (OTR): On The Road price including VAT, delivery, and registration
- Documentation Fee: Admin fee charged by the finance company
Step 2: Total Credits
Total Credits = Part Exchange Equity + Customer Deposit
- Part Exchange Equity: Part Exchange Value - Part Exchange Payoff (rounded)
- Customer Deposit: Cash you're putting down
Step 3: Amount of Credit
Amount of Credit = Total Cost - Total Credits
This is the amount you'll need to finance through the lender (rounded to nearest penny).
4. Finance Type Calculations (Frequency-Adjusted)
Hire Purchase (HP)
Standard amortisation calculation adjusted for payment frequency:
Payment Per Period = P × [r(1+r)^n] / [(1+r)^n - 1]
- P: Amount of credit
- r: Period interest rate (APR ÷ Periods Per Year)
- n: Total number of periods (calculated from agreement term)
You pay the full amount of credit plus interest over the term.
Personal Contract Purchase (PCP)
Lower payments with a balloon payment at the end:
Payment Per Period = (P - GFV) × [r(1+r)^n] / [(1+r)^n - 1]
- P: Amount of credit
- GFV: Guaranteed Future Value (balloon)
- r: Period interest rate
- n: Number of periods
You only pay the depreciation plus interest.
5. Payment Schedule Generation (Row-by-Row)
Schedule-Driven Calculation
Each payment period is calculated individually with rounding:
For each period:
- Interest = roundToPence(Balance × Period Rate)
- Principal = roundToPence(Payment - Interest + Extra Payment)
- Balance = roundToPence(Previous Balance - Principal)
- Total Payment = roundToPence(Payment + Extra Payment)
6. Schedule-Driven Totals
Totals from Schedule
All summary totals are calculated from the actual payment schedule:
- Total Interest: Sum of all interest payments from schedule
- Total Payments: Sum of all payment amounts from schedule
- Total Amount Payable: Amount of Credit + Total Interest + Documentation Fee
7. Excel Export Functionality
Professional Export Features
The calculator generates professional Excel files with:
- Summary Sheet: All finance details, FCA compliance information
- Schedule Sheet: Complete payment schedule with all periods
- FCA Compliance: UK regulatory compliance indicators
- Professional Format: Ready for lenders, accountants, or personal records
FCA Compliance
The Financial Conduct Authority (FCA) requires specific disclosures and calculations:
Representative APR
- Must be offered to at least 51% of customers
- Must be calculated using standard formula
- Must include all mandatory charges
- Must be prominently displayed
Required Disclosures
- Total amount of credit
- Total amount payable
- Representative APR
- Payment schedule
- Early settlement rights
Important Note
Our calculator provides estimates based on the information you provide. Actual finance terms may vary based on your credit score, lender policies, and other factors. Always review the final finance documents from your lender.
Consumer Credit Act 1974
UK car finance is regulated under the Consumer Credit Act:
Your Rights
- 14-day cooling-off period
- Right to settle early
- Right to information
- Protection from unfair terms
Early Settlement
- Can settle at any time
- May receive interest rebate
- Early settlement fee may apply
- Must be calculated fairly
PCP vs HP Comparison
Hire Purchase (HP)
- Monthly Payments: Higher
- Ownership: Own at end
- Mileage: No restrictions
- End Options: Keep the car
- Total Cost: Higher
Personal Contract Purchase (PCP)
- Monthly Payments: Lower
- Ownership: Option to own
- Mileage: Annual limits
- End Options: Return, exchange, or buy
- Total Cost: Depends on end choice
Professional Features Explained
Row-by-Row Rounding Benefits
Why This Matters:
- Accuracy: Eliminates rounding errors that accumulate over time
- Compliance: Matches professional finance software standards
- Transparency: Every calculation is traceable and verifiable
- Consistency: Totals always match the payment schedule exactly
Dynamic Frequency Support
Benefits:
- Flexibility: Supports monthly, fortnightly, and weekly payments
- Accuracy: Correct period counts and interest calculations
- User Choice: Users can choose their preferred payment frequency
- Interest Savings: More frequent payments can reduce total interest
Excel Export Features
Professional Export:
- Summary Sheet: Complete finance details and FCA compliance info
- Schedule Sheet: Full payment schedule with all periods
- FCA Compliance: Regulatory compliance indicators
- Professional Format: Ready for lenders, accountants, or personal records
Calculation Accuracy Standards
Professional-Grade Accuracy
Our calculator meets the same accuracy standards as professional finance software:
- Row-by-Row Rounding: Every monetary value rounded to nearest penny
- Schedule-Driven Totals: All totals calculated from actual payment schedule
- Frequency Accuracy: Correct period counts for all payment frequencies
- End Date Precision: Accurate agreement end dates based on actual payment frequency
- FCA Compliance: UK regulatory compliance with proper calculations
Validation and Testing
Our calculations are validated against:
- Professional Finance Software: Cross-checked with industry standards
- UK Regulatory Requirements: FCA and Consumer Credit Act compliance
- Real-World Scenarios: Tested with actual finance examples
- Mathematical Accuracy: Verified against standard financial formulas