Professional Calculation Methodology
Professional Features: Our calculator uses row-by-row rounding to the nearest cent, dynamic frequency support, schedule-driven totals, and full TILA compliance for US consumer protection laws.
1. Row-by-Row Rounding (US Standard)
Rounding Function: roundToCents(amount) = Math.round(amount × 100) / 100
Every monetary calculation is rounded to the nearest cent before being used in subsequent calculations:
- Tax Calculations: Sales tax is rounded individually
- Payment Schedule: Each payment row is rounded before updating balance
- Totals: All totals are calculated from rounded schedule values
- Accuracy: Eliminates cent-level drift across the entire loan 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((Loan Term ÷ 12) × Periods Per Year)
3. Loan Amount Calculation
Our calculator follows the standard US auto loan calculation process with row-by-row rounding:
Step 1: Total Vehicle Cost
Total Cost = Vehicle Price + Sales Tax + Dealer Fee + Title & Registration
- Vehicle Price: MSRP or negotiated price
- Sales Tax: State-specific rate applied to vehicle price (rounded)
- Dealer Fee: Processing/documentation fee (varies by state)
- Title & Registration: State fees for vehicle registration
Step 2: Total Credits
Total Credits = Trade-in Equity + Cash Down Payment
- Trade-in Equity: Trade-in Value - Trade-in Payoff (rounded)
- Cash Down Payment: Money you're putting down
Step 3: Loan Amount
Loan Amount = Total Cost - Total Credits
This is the amount you'll need to finance through the lender (rounded to nearest cent).
4. Payment Calculation (Frequency-Adjusted)
We use the standard amortization formula required by the Truth in Lending Act (TILA), adjusted for payment frequency:
Amortization Formula (Frequency-Adjusted)
Payment Per Period = P × [r(1+r)^n] / [(1+r)^n - 1]
- P: Principal loan amount
- r: Period interest rate (APR ÷ Periods Per Year)
- n: Total number of periods (calculated from loan term)
Example Calculation
For a $20,000 loan at 5.5% APR for 60 months (monthly payments):
- Principal (P) = $20,000
- Period rate (r) = 5.5% ÷ 12 = 0.004583
- Number of periods (n) = 60
- Payment Per Period = $20,000 × [0.004583(1+0.004583)^60] / [(1+0.004583)^60 - 1]
- Payment Per Period = $382.02
5. Payment Schedule Generation (Row-by-Row)
Schedule-Driven Calculation
Each payment period is calculated individually with rounding:
For each period:
- Interest = roundToCents(Balance × Period Rate)
- Principal = roundToCents(Payment - Interest + Extra Payment)
- Balance = roundToCents(Previous Balance - Principal)
- Total Payment = roundToCents(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: Loan Amount + Total Interest + Total Fees
7. Excel Export Functionality
Professional Export Features
The calculator generates professional Excel files with:
- Summary Sheet: All loan details, TILA compliance information
- Schedule Sheet: Complete payment schedule with all periods
- TILA Compliance: US regulatory compliance indicators
- Professional Format: Ready for lenders, accountants, or personal records
TILA Compliance
The Truth in Lending Act (TILA) requires specific disclosures and calculations:
APR Requirements
- Must include interest and certain fees
- Must be disclosed prominently
- Must be calculated using standardized formula
- Cannot be lower than the interest rate
Required Disclosures
- Total amount financed
- Total finance charge
- Total of payments
- Payment schedule
- Prepayment penalties (if any)
Important Note
Our calculator provides estimates based on the information you provide. Actual loan terms may vary based on your credit score, lender policies, and other factors. Always review the final loan documents from your lender.
Professional Features Explained
Row-by-Row Rounding Benefits
Why This Matters:
- Accuracy: Eliminates rounding errors that accumulate over time
- Compliance: Matches professional lending 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 loan details and TILA compliance info
- Schedule Sheet: Full payment schedule with all periods
- TILA 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 lending software:
- Row-by-Row Rounding: Every monetary value rounded to nearest cent
- Schedule-Driven Totals: All totals calculated from actual payment schedule
- Frequency Accuracy: Correct period counts for all payment frequencies
- End Date Precision: Accurate loan end dates based on actual payment frequency
- TILA Compliance: US regulatory compliance with proper calculations
Validation and Testing
Our calculations are validated against:
- Professional Lending Software: Cross-checked with industry standards
- US Regulatory Requirements: TILA and consumer protection compliance
- Real-World Scenarios: Tested with actual loan examples
- Mathematical Accuracy: Verified against standard financial formulas