Appendix M2 to Part 1026 - Sample Calculations of Repayment Disclosures
12:9.0.1.1.1.9.1.1.14 : Appendix M2
Appendix M2 to Part 1026 - Sample Calculations of Repayment
Disclosures
The following is an example of how to calculate the minimum
payment repayment estimate, the minimum payment total cost
estimate, the estimated monthly payment for repayment in 36 months,
the total cost estimate for repayment in 36 months, and the savings
estimate for repayment in 36 months using the guidance in appendix
M1 to this part where three annual percentage rates apply (where
one of the rates is a promotional APR), the total outstanding
balance is $1000, and the minimum payment formula is 2 percent of
the outstanding balance or $20, whichever is greater. The following
calculation is written in SAS code.
data one;
/* Note: pmt01 = estimated monthly payment to repay balance in 36
months sumpmts36 = sum of payments for repayment in 36 months month
= number of months to repay total balance if making only minimum
payments pmt = minimum monthly payment fc = monthly finance charge
sumpmts = sum of payments for minimum payments */ * inputs; *
annual percentage rates; apr1 = 0.0; apr2 = 0.17; apr3 = 0.21; *
insert in ascending order; * outstanding balances; cbal1 = 500;
cbal2 = 250; cbal3 = 250; * dollar minimum payment; dmin = 20; *
percent minimum payment; pmin = 0.02; * (0.02 + perrate); *
promotional rate information; * last month for promotional rate;
expm = 6; * = 0 if no promotional rate; * regular rate; rrate =
.17; * = 0 if no promotional rate; array apr(3); array perrate(3);
days = 365/12; * calculate days in month; * calculate estimated
monthly payment to pay off balances in 36 months, and total cost of
repaying balance in 36 months; array xperrate(3); do I = 1 to 3;
xperrate(I) = (apr(I)/365) * days; * calculate periodic rate; end;
if expmgt 0 then xperrate1a = (expm/36) * xperrate1 + (1-(expm/36))
* (rrate/365) * days; else xperrate1a = xperrate1; tbal = cbal1 +
cbal2 + cbal3; perrate36 = (cbal1 * xperrate1a + cbal2 * xperrate2
+ cbal3 * xperrate3)/(cbal1 + cbal2 + cbal3); * months to repay;
dmonths = 36; * initialize counters for sum of payments for
repayment in 36 months; Sumpmts36 = 0;
pvaf = (1-(1 + perrate36) ** -dmonths)/perrate36; * calculate
present value of annuity factor;
pmt01 = round(tbal/pvaf,0.01); * calculate monthly payment for
designated number of months; sumpmts36 = pmt01 * 36; * calculate
time to repay and total cost of making minimum payments each month;
* initialize counter for months, and sum of payments; month = 0;
sumpmts = 0; do I = 1 to 3; perrate(I) = (apr(I)/365) * days; *
calculate periodic rate; end; put perrate1 = perrate2 = perrate3 =;
eins: month = month + 1; * increment month counter; pmt =
round(pmin * tbal,0.01); * calculate payment as percentage of
balance; if month geexpm and expm ne 0 then perrate1 = (rrate/365)
* days; if pmtltdmin then pmt = dmin; * set dollar minimum payment;
array xxxbal(3); array cbal(3); do I = 1 to 3; xxxbal(I) =
round(cbal(I) * (1 + perrate(I)),0.01); end; fc = xxxbal1 + xxxbal2
+ xxxbal3 − tbal; if pmtgt (tbal + fc) then do; do I = 1 to 3; if
cbal(I) gt 0 then pmt = round(cbal(I) * (1 + perrate(I)),0.01); *
set final payment amount; end; end; if pmt le xxxbal1 then do;
cbal1 = xxxbal1 − pmt; cbal2 = xxxbal2; cbal3 = xxxbal3; end; if
pmtgt xxxbal1 and xxxbal2 gt 0 and pmt le (xxxbal1 + xxxbal2) then
do; cbal2 = xxxbal2 − (pmt − xxxbal1); cbal1 = 0; cbal3 = xxxbal3;
end; if pmtgt xxxbal2 and xxxbal3 gt 0 then do; cbal3 = xxxbal3 −
(pmt − xxxbal1 − xxxbal2); cbal2 = 0; end; sumpmts = sumpmts + pmt;
* increment sum of payments; tbal = cbal1 + cbal2 + cbal3; *
calculate new total balance; * print month, balance, payment
amount, and finance charge; put month = tbal = cbal1 = cbal2 =
cbal3 = pmt = fc =; if tbalgt 0 then go to eins; * go to next month
if balance is greater than zero; * initialize total cost savings;
savtot = 0; savtot = round(sumpmts,1) - round (sumpmts36,1); *
print number of months to repay debt if minimum payments made,
final balance (zero), total cost if minimum payments made,
estimated monthly payment for repayment in 36 months, total cost
for repayment in 36 months, and total savings if repaid in 36
months; put title = ‘ ’; put title = ‘number of months to repay
debt if minimum payment made, final balance, total cost if minimum
payments made, estimated monthly payment for repayment in 36
months, total cost for repayment in 36 months, and total savings if
repaid in 36 months’; put month = tbal = sumpmts = pmt01 =
sumpmts36 = savtot =; put title = ‘ ’; run;