macchiaz-o
Well-Known Member
- First Name
- Jonathan
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- Nov 25, 2019
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- MY21 J1 Premium RWD SR
? That explains it. Thank you!My own calculation was originally $20 higher than Ford website and dealer number as well. The cause of the difference is that we assumed monthly compounding. (I checked your spreadsheet to make sure, and that’s exactly what you did.) We divided interest rate by 12, and calculated 12 payments per year. That's wrong. That’s how mortgage payments are calculated, not how auto loans are.
Auto loan is daily compounding. The convention is to assume 365 days a year and 30.416 days per month. What You need to do is divide interest rate by 365 (instead of 12), and multiply payment number by 30.416 (365/12).
Put another way, instead of pmt(rate / 12, 12 * 3, principal), you do pmt(rate / 365, 365 * 3, principal) * 30.416. With that latter formula, my own calcalations matches Ford's.
Weird that the regular retail contract is monthly compounding while the balloon retail contract compounds daily.
I'll try to get this reflected in my spreadsheet updated soon.
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