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A&H Balloon Coverage
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Insure N-1 Payments
Insure N Payments
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Two options for A&H coverage on a Balloon Loan are available.
(N = number of payments).
• Cover N Regular Payments
• Cover N-1 Regular payments
Contact your Insurance Provider for information on how they handle this coverage.
Note: Some providers do not allow A&H on Balloons. There is an option
under "Insurance Options" that you can check Do not allow A&H on balloon.
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A&H Deviation Factor
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Rate at which A&H rates are to be deviated from Prima Facie for the state.
Example: If A&H rates are to be 90% of Prima Facie, enter .9 In most
cases there is no deviation (100% of Prima Facie rates). In this event, enter 1.
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A&H Discount Factor
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Enter the percentage of discount for interest and mortality per year to be used for A&H Insurance premiums.
Example: If the factor is 3.5% per year, enter 3.5 at this prompt.
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A&H Joint Factor
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Determines whether Joint A&H coverage is allowed (if the factor is set to 0 then Joint A&H will
not appear as an option). This factor is multiplied by the single A&H rate to get a Joint A&H Rate.
Example: If Joint A&H is 167% of Single A&H, enter 1.67.
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Accident & Health Insurance
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If A&H insurance is available, you will see choices of None, Single, and possibly Joint. If Joint is grayed
out, a Joint A&H Factor was not included on the Insurance Setup Screen.
A&H Rates - Various coverage types of accident and health insurance may be available in a drop down
menu. (i.e. 14 Retro, 30 Retro). Verbiage comes from the Description field on the Accident & Health Rates
setup screen. Select which A&H schedule to use.
Term in Payments - Optional prompt based on "Prompt for Life, A&H, and IUI terms" on the Insurance
Options setup screen. Enter the A&H term in months. This term cannot exceed the term of the loan or the A&H term cap.
Buyer DOB
Co-Buyer DOB
Underwriting Limits based on oldest age.
Note: DOB only appears if under the Age Options on the Underwriting Limits setup screen, a Maximum Age value has been entered.
Note: Only appears if A&H insurance rates are available in the Accident & Health Rates setup screen.
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Accident & Health (A&H) Rates
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Description
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Changes the description that appears in the A&H Rates pull down selection box in the Accident & Health Insurance section of the prompt window.
Usually includes State & Coverage type.
Standard coverage types are 14 Retro, 14 Elim, 30 Retro, 30 Elim, 7 Retro, 7 Elim
Enter the appropriate Rate for each month
(i.e. $3.25 enter as 3.25).
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Mos Rate
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Rates may be entered in groups of 1, 3, 6 or 12 month periods. (See Insurance Setup Screen)
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Do Not Round
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Turn this option on to stop rounding on Insurance rates when they are interpolated. This only applies to rates that are not bracketed.
If this option is off, the values will be near rounded to two places beyond the decimal point when the Rates are interpolated.
Warning: Rounding can have significant impact on the calculations, especially on long-term transactions. It is
important that several sample transactions are calculated with this option on or off to make sure that the calculations are occurring as you expect.
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Add Rates
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Click on the "add rates" button to bring up a select box to choose additional sets of Prima Facie Accident and Health
Rates, or to select a BLANK set of rates that can be used to enter new rates. When the rates have been entered here,
the description will appear in the A&H Rates pull down selection box in the Accident & Health Insurance section
of the Loan Type that is being entered.
Up to 10 sets of Accident and Health Rates can be entered.
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Delete
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Click on the "delete" button to remove the current set of Accident and Health Rates. If the set is Deleted it will no
longer appear in the A&H Rates pull down selection box in the Accident & Health Insurance prompt window.
Note: If A&H prompt is not wanted, all A&H schedules must be deleted.
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A&H Rates Bracketed by
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Choices: 1, 3, 6, 12 months
Select the option that best suits your A&H Rate Table.
(i.e. if Rates for months 1-6 are $1.25, 7-12 month $2.10,... chose 6)
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A&H Refund Type
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Choices: (Check all that are applicable)
Rule of 78ths
Pro-Rata
Anticipation
Mean Between
Note: If more than one is checked, a drop down box appears on the input screen of the Refund Program
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Accidental Death
(Optional Prompt)
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Adds a None/Single/Joint prompt for Accidental Death Insurance to the Standard Loan Entry Screen. The premium is
based on the Total of Payments.
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Accidental Death Rates (AD)
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Options include Single & Joint Decreasing and Single & Joint Level. Rate type options include $100/yr
(Prorate), Per $100 or $1000/Mo. Based on Total of Payments
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Actuarial
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Refund Type
Finance Charge
Method of allocating payments made on a debt between the amount financed and the finance charge pursuant
to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from
or any deficiency is added to, the outstanding balance of the amount financed.
Life Premium
Amount of life premium remaining at the point of payoff is computed utilizing an amortization schedule and
the scheduled payment dates. Balances of premiums are totaled for refund amount.
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Add-On Rate
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Often referred to as pre-compute
(I = P*R*T) method.
Decimal is only required if the Rate is fractional as in 12.25.
See Loan Setup screen to add this prompt
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Alternate Rate Deviations
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Prompt for Completed Health Questions
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Selecting this field will prompt a checkbox titled Completed Health Questions to appear in the Loan Information
(input) Window. The box will appear directly above the Credit Life Insurance selection box in the input window.
Checking this box triggers the implementation of the alternate rate deviations. Since the deviation is dependent
upon two conditions: 1) requiring evidence of insurability and 2) the OAI being less than or equal to a specified amount,
the first condition will be met by the user placing a manual check in the box titled Completed Health Questions.
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Life Maximum OAI
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If the insurance provider, or its agent, requires evidence of insurability and the Original Amount of Insurance (OAI)
is equal or less than a specified amount, the published prima facie rates may be deviated downward by a specified percentage.
Enter specified dollar amount in this field.
Example: The Indiana Insurance Regulation mandates use of a 90% rate deviation if the provider requires evidence of
insurability and the OAI is $15,000 or less. If you are in Indiana you would input $15,000 in this field, if not you would
leave the value at 0.
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Life Alternate Dev%
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Input the deviation value that coincides with the two conditions stated in Alternate Deviation Maximum OAI above.
Example: In Indiana $15,000 would be entered in the Life Alternate Deviation Maximum OAI field, and .90 entered
into the Life Alternate Deviation field.
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A&H Max Aggregate
A&H Max Monthly
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If the insurance provider, or its agent, requires evidence of insurability and the Original Amount of Insurance (Maximum
Aggregate) or monthly indemnity is equal or less than a specified amount, the published prima facie rates may be deviated
downward by a specified percentage. Enter specified dollar amount in these fields.
Example: The Indiana Insurance Regulation mandates use of a 90% rate deviation if the provider requires evidence of
insurability and the max aggregate is $15,000 or less and you would input $15,000 in this field. If evidence of
insurability is not required, you would leave the value at 0. In Maine, the maximum monthly indemnity is $1,000
and there is no amount for the Maximum Aggregate.
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A&H Alternate Dev%
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Input the deviation value that coincides with the two conditions stated in Alternate Deviation Maximum Aggregate or Maximum Monthly above.
Example: In Indiana $15,000 would be entered in the AH Max Aggregate field, and .90 entered into the AH Alternate Dev % field.
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Amort Term in Pmts
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One option in a balloon transaction is to use a payment that would amortize the loan over a given "amortization period"
and then solve for a balloon. Enter the Amortization term and SmartPC will solve for that payment and the corresponding
balloon.
Note: Input only the number of payments and the amortization term. Leave the Payment and Balloon blank.
There are 3 methods available. See the "Insurance Options" setup screen for choices.
Appendix B gives examples.
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Amount Financed
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The amount disbursed to or on behalf of the consumer. Truth-in-Lending definition.
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Amount Requested
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The amount requested by the borrower. This does not include insurance or fees.
Note: Only displays if Solve Type is Payment
The use of a decimal is only required if the Amount Requested has cents.
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Anticipation
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Rule of Anticipation (ROA) Life and A&H Premium Refund Type.
Refunding the unearned premium using the same formula that was used to compute the original premium
only the remaining term rate is substituted in place of the originally scheduled rate and the remaining
balance is substituted in place of the original amount.
Note: For A&H insurance this method will generally return a larger portion of the original
A&H premium than Rule of 78. For credit life, this method makes sense when the underlying insurance
rate is a Uniform Monthly (MOB) Rate.
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APR
(Annual Percentage Rate)
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Truth-in-Lending definition: The cost of credit expressed as an annual rate.
The APR is very often misused as synonymous with the computational interest rate. While it is true
in the absence of fees that are a part of the Finance Charge the APR will be a value nearly, if not
absolutely identical to the interest rate, it is inaccurate to say they are synonymous.
Federal Statutes and Regulations define the APR, while the interest rate is generally controlled at the state level.
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APR Disclosure
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U.S. Rule
Actuarial
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Option to compute the APR by either the Actuarial or U.S. Rule method. Both methods are authorized in Appendix J
of Regulation Z.
The time counting calendar and applicable daily rate selected for the purpose of computing interest (selected in
the "Payment Setup" screen) may cause the disclosed Truth-in-lending APR value to be different from the computational
interest rate.
For example, counting exact days for computing interest (per diem calendars) may cause the resulting APR to be 12.05%
even though the computational interest rate was 12%.
The APR computation uses the "Federal Calendar" method of counting time and employs a daily rate of 1/360. Since this
method is always employed, it allows credit finance charges to be compared on a "level field" basis and used for
comparison by consumers, regardless of how a particular institution chooses to compute and accrue interest charges.
The program allows you to disclose the precise APR value (Option 1) or the "nominal" value that is equivalent to
the input interest rate (Option 2).
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Option 1
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Option 1 - Precise A.P.R.
Will display the precise APR 5/4 rounded to three decimal places. For example, an APR of 23.4578042% will
be displayed as 23.458%.
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Option 2
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Option 2 - Nominal Value
Will compute the precise APR and compare that value to the input interest rate. If the computed rate
is within the prescribed .125% tolerance allowed by Regulation Z, the program will display the input
computational interest rate as the APR.
If the computed APR is not within the prescribed .125% tolerance, the computed APR value will be displayed.
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CA Administrative Fee
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Enabled
Rate
Maximum amount of
Up to and Including
Name
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This fee type is intended to accommodate the Administrative Fee allowed by Sec. 22305 of the California Finance Lenders
Law. However, it can be used for any fee with a similar structure. The fee name is an editable item by the end user.
If Principal < $2500
5% of Principal or $50 Max
If Principal > $2500
$75
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Case Number
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Case Number - Information Only, not used by program.
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Case Name
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Default case names are by state abbreviation. When creating new case files assign a name that will help you identify
the file. This name does show on the top bar when using SmartPC.
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Closing Date
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Often called the "contract date" or "loan date".
In the majority of cases it is also the date that interest begins to accrue on the transaction. For that reason,
the interest start date will automatically be set to the contract date. The user has the ability to change the
interest start date if a special financing plan is in place and that date differs from the contract signing date.
Use MMDDYY or MM/DD/YY format.
Example: If the closing date is May 14, 2000, enter either 51400 or 5/14/00.
Note: See Loan setup screen to activate this prompt.
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Compensate Life Rate for Odd Days
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When there are extra days to 1st payment (i.e. 45 Days) if the prorate life rate is inflated for the extra 15 days, check this box.
Example .50/100/yr life rate
12 payments 45D to 1st
Compensated life rate = 12.5/12 * .50 = .52
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Compensated Decreasing Life
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Method of Gross Life Term truncation
This method applies an actuarial rate per month per $1000 of coverage to the scheduled monthly outstanding balance
of the total of payments for the truncated term.
Insurance Term - The equivalent rate will be computed at the truncated insurance term.
Transaction Term - The equivalent rate will be computed at the loan term
Note: The default method of gross life term truncation is to multiply the proper rate per $100 of coverage
at the term of truncation times the original total of payments.
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Convert Rate to MOB at Amort Term
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Balloon loans only.
Turn this option on and the MOB Life rate will be converted at the Amortization term, instead of at the term of the loan.
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Coverage for A&H, IUI
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Insurance on term in months
Insurance on number of payments
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When there are extra months (periods) to 1st Payment date, the insurance rate used can be at the term or the number of payments
Example:
12 Payments (Number of Payments)
90 Days to 1st Payment (Term of 14 mos)
A&H at 12 mo $2.20
A&H at 14 mo $2.22
On term uses 2.22
On number of payments uses 2.20
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Coverage for Life, Prop, Acc Death
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Insurance on term in months
Insurance on number of payments
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When there are extra months (periods) to 1st Payment date, the insurance rate used can be at the term or the number of payments.
Example:
12 Payments (Number of Payments)
90 Days to 1st Payment (Term of 14 mos)
.50/100/yr
12 mo rate is .50
14 mo rate is .58
On term uses .58
On number of payments uses .50
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Credit Life Insurance
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Displays the type(s) of credit life coverage available. If only one type available it will appear as grayed in box. If
multiple types available, choice can be made from a drop down box.
There may also be choices for Single, Joint and No Insurance.
This prompt will only appear if there is credit life insurance available for this type of loan as selected in the
Insurance Options Setup screen.
Term in Payments - Optional prompt based on "Prompt for Life, A&H, and IUI terms" on the Insurance Options
setup screen. Enter the A&H term in months. This term cannot exceed the term of the loan or the A&H term cap.
Buyer DOB
Co-Buyer DOB: Underwriting Limits based on oldest age.
Note: DOB only appears if under the Age Options on the Underwriting Limits setup screen, a Maximum Age value
has been entered.
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Daily Refund for Actuarial
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The default method for refund computations is to measure the remaining time in whole months. The Refund Days field
allows the user to select the proper "day Rule" for determining when a whole month is earned when prepayment occurs between
scheduled payment dates.
The refund program also has the capability to compute refunds on a daily basis when prepayment occurs between scheduled
payment dates. Check this field and the refund value takes into account the earned actuarial charge for the actual number
of days since the last scheduled payment.
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Daily Refund for Pro-Rata
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The default method for refund computations is to measure the remaining time in whole months. The Refund Days field
allows the user to select the proper "day rule" for determining when a whole month is earned when prepayment occurs between
scheduled payment dates.
The refund program also has the capability to compute refunds on a daily basis when prepayment occurs between scheduled
payment dates. Check this field and the refund value takes into account the earned prorate charge for the actual number
of days since the last scheduled payment.
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Dealer Reserve
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The interest computing method is used to compute the dealer reserve.
Example: Interest Rate 12%, Bank Rate 10%, the interest is computed at each rate and the difference is the dealer reserve.
Turning this option on will add a Bank Rate input prompt to Loan Input screens.
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Decreasing Life Gross Coverage
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Gross N-1 Payments
Gross N Payments
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On BALLOON Transactions
These options determine the Original Amount of Insurance for the Decreasing Life premium in a Balloon Transaction.
Either Gross N-1 Payments (cover the regular payment amount for the number of regular payments),
Or Gross N Payments (cover the regular payment amount for the full term of the loan).
Example: $2000 Total of Payments with 5 regular payments of $200 and 1 Balloon payment of $1000.
Gross N-1 Payments would provide coverage on the $200 regular payment for 5 payments.
Gross N Payments would provide coverage on the $200 regular payment for 6 payments.
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Decr Life Refund Type
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Choices: (Check all that are applicable)
Rule of 78ths
Anticipation
Actuarial
Pro-Rata
Mean Between (for Gross only)
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Decr Life Premium /
*Loan Balance
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Refunds
Enter the Decreasing life premium, if any, or, if the prompt reads Loan Balance, enter the Loan Balance at the present time.
*Note: If the option to Use Loan Balance with Anticipation Decr Life checkbox is turned on then this prompt will be Loan Balance instead of Decr Life Premium for Net Insurance.
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Deduct Insurance from Proceeds
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Turn this option on and the Credit Life Insurance coverage premiums will be deducted from the initial proceeds or cash advance.
Note: This is typically used to maintain a loan to value ratio for mortgage lending.
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Discount Factor 1:
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Enter the percentage of discount for interest and mortality per year to be used for Credit Life Insurance premiums.
Example: If the factor is 3.5% per year, enter 3.5 at this prompt.
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Discount Factor 2:
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Enter percentage of discount per year to be used for credit life insurance premiums when term exceeds the term entered below.
Example: If the factor is 4.6% per year, enter 4.6 at this prompt.
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Use Disc 2 Over __ Months
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Enter the term over which the second discount factor is used.
Example: If a different Discount Factor is used after 36 months then enter 36 here.
Note: A value must be entered in the Discount Factor 2: option (see above) for this option to apply Discount 2.
If a value is not entered in Discount Factor 2: then a discount will not be calculated over this number of months.
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Discount Factor for Level
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If a different discount factor is to be used for Level Life computed from a MOB rate, enter the percentage of discount per year here.
Example: If a factor of 5.5% per year for level insurance is used, enter 5.5 at this prompt.
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Disc Factor for truncated
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Enter the discount rate if it's different than the full term discount rate.
Note: In the state of ME, the discount rate for truncated life is 6.35.
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Disc Factor for Single Pay
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Enter the discount rate if it's different than the regular payment.
Note: In the state of ME, the discount rate for Single payment is 6.35
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Discount Method/Factors
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2 Methods available when discounting Credit Life Insurance for interest and mortality.
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Annual
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Annual discounting uses formula
(N * d)/24 + 1
where N=term d=disc rate/100
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NAIC
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NAIC method is per NAIC Model Act
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Do Not Allow A&H on Balloon
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Some insurance providers do not allow A&H coverage on Balloon transactions. Check with your provider.
Note: If A&H is allowed, see Insurance Setup screen to choose if coverage is on N or N-1 Payments.
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Do Not Insure Fee-Financed
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Turn this option on to prevent Net Credit Life Insurance coverage from being calculated on the Fee-Financed amount.
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Do Not Round Life Rates
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Turn this option on to stop rounding on Insurance rates when they are converted.
If this option is on, full precision (to six places beyond the decimal point) will be used. If this option is
off, the values will be rounded to two places beyond the decimal point when the Rates are converted.
Warning: Rounding can have significant impact on the calculations, especially on long-term loan transactions.
It is important that several sample transactions are run with this option on or off to make sure that the
calculations are working as expected.
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Do Not Show Insurance per Payment
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Check this option and the amount of Insurance per Payment on the Loan Calculation Output screen will not appear.
With this option unchecked 'Ins. per payment' will show on the output screen as the last item printed in the
Insurance Information section directly below the Daily insurance cost amount.
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Dollar Tax Input
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Turn this option on to enter an actual dollar tax amount instead of having it calculated as a percentage of
the Sale Price (or Sale Minus Trade-In).
Only available if Retail Sales Prompts checked.
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Fee Pre-Paid
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Any fee paid separately in cash or by check before or at the time the loan is closed, or withheld from the
proceeds of the loan at any time. This fee is subtracted from the Truth-in-Lending Amount Financed that
will result in a lower Amount Financed than the principal.
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Amount,
Percentage of
Principal
Amount Financed
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Fee can be either Flat dollar amount (Amount) or a percentage of Principal or Amount Financed.
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Fee Name
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"Fee Pre-paid" is default label. If a custom fee name is desired, enter the name.
Note: Defining the types of fees incorporated into consumer credit transactions can often be difficult because of the misuse
of labels in the industry. A fee that is simply described as a "service charge" does not provide enough information to determine
the manner in which the fee needs to be computed. Please be extremely careful when attempting to define fees solely by their label.
For more information on the definition of Fee Pre-paid and how it affects Loan transactions
see Appendix A Fees: Definitions and examples of their use.
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Fee Financed
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Any fee that is included in the principal and Finance Charge. Interest is earned on this fee. It is excluded
from the Amount Financed for APR calculations.
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Amount,
Percentage of
Principal
Amount Financed
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Fee can be either Flat dollar amount (Amount) or a percentage of Principal or Amount Financed.
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Fee Name
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"Fee Financed" is default label. If a custom fee name is desired, enter the name.
Note: Defining the types of fees incorporated into consumer credit transactions can often be difficult because of the misuse of
labels in the industry. A fee that is simply described as a "service charge" does not provide enough information to determine the
manner in which the fee needs to be computed. Please be extremely careful when attempting to define fees solely by their label.
For more information on the definition of Fee Financed and how it affects Loan transactions
see Appendix A Fees: Definitions and examples of their use.
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Fee Non-Financed
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Any fee that is not paid at closing, does not have interest accrued on it although it is included in the total of
payments and is part of finance charge for APR calculations.
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Amount,
Percentage of
Principal
Amount Financed
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Fee can be either Flat dollar amount (Amount) or a percentage of Principal or Amount Financed.
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Fee Name
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"Fee Non-Financed" is default label. If a custom fee name is desired, enter the name.
Note: Defining the types of fees incorporated into consumer credit transactions can often be difficult because of the misuse
of labels in the industry. A fee that is simply described as a "service charge" does not provide enough information to determine
the manner in which the fee needs to be computed. Please be extremely careful when attempting to define fees solely by their label.
For more information on the definition of Fee Non-Financed and how it affects Loan transactions
see Appendix A Fees: Definitions and examples of their use.
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Fee-Other
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Any fee (not retained by the creditor) which is included in the principal and the Amount Financed and excluded from the Finance Charge. Interest is computed on this fee.
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Amount,
Percentage of
Principal
Amount Financed
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Fee can be either Flat dollar amount (Amount) or a percentage of Principal or Amount Financed.
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Fee Name
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"Other Fee" is default label. If a custom fee name is desired, enter the name.
Note: Defining the types of fees incorporated into consumer credit transactions can often be difficult because of the misuse of labels
in the industry. A fee that is simply described as a "service charge" does not provide enough information to determine the manner in which
the fee needs to be computed. Please be extremely careful when attempting to define fees solely by their label. For more information on
the definition of Other Fee and how it affects Loan transactions
see Appendix A Fees: Definitions and examples of their use.
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Final Payment
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Default in per Diem time counting is to display an odd final payment.
Note: See Payment Setup screen if level payments are desired.
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Finance Charge
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The total cost of credit expressed as a dollar amount. Truth-in-Lending definition.
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Florida Fees
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Doc Stamp Rate
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A document stamp may be calculated for certain loan transactions. The Doc Stamp charge is calculated on the nearest $100
or fraction thereof of the Amount Financed.
Example: If the Documentary Stamp Rate is $.35 per $100, enter .35 in this prompt.
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Intangible Tax Rate
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Intangible taxes may be calculated for certain loan transactions. The Intangible Tax Rate is calculated on the exact amount
of the Amount Financed.
Enter the percentage of the Amount Financed to apply to the intangible tax rate in this prompt. For example if the Intangible
Tax Rate is $.20 per $100 enter .20 in this prompt.
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Interest
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The dollar amount resulting from applying the computational interest rate to the outstanding principal balance
for a specified time interval.
Interest is technically the "rent" charge for a loan of money. A credit sale cannot accrue "interest" because
no loan of money is made. The amount corresponding to interest in a credit sale has traditionally been called
"time-price differential". Even though academically imprecise, the term "interest" is widely used in the retail
industry.
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Interest (Military)
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Part of the Military Lending Information disclosure per JWNDAA.
Military Interest includes:
1. All fees
2. Points, origination fees,
participation fees
3. Renewal charges
4. Single premium credit
insurance premiums
5. Single Amount debt protection
charges/fees
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Interest Start Date
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Date interest starts to accrue. In most cases the interest start date will be the same as the contract date.
For special financing that incorporates an "interest free" grace period, the interest start date may be different
than the contract date. When this is the case it is important to remember that the consumer has use of the credit
for a longer period of time than for which the creditor is accruing interest. The resulting effect may be an APR
that is lower than the interest rate.
Enter Interest Start Date in MMDDYY or MM/DD/YY format.
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Irregular Loans
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Allows payments that are not equal in amount and/or time periods.
Enter Loan information and hit calculate.
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Payment Date
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On the Irregular Loan screen enter any Irregular payment date. Either enter a payment date in MMDDYY or MM/DD/YY
format or select a date (from the selection box).
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Irregular Payment
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Enter the irregular payment for the specified date. If you want to skip a payment, enter 0. Single-click the
Add >> button and choose between making a payment once or yearly. Continue this sequence until all irregular
payments have been entered.
Note: To delete some or all of the irregular payments, select the payment to delete and single-click
the < Delete button. Select any payment and single-click the < Delete All button to delete all of the payments that
are displayed.
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I.U.I.
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Involuntary Unemployment Insurance
If I.U.I. insurance is available, a No/Yes prompt for Unemployment Insurance to the Standard Loan Entry Screen
appears.
Term in Payments - Optional prompt based on "Prompt for Life, A&H, and IUI terms" on the Insurance
Options setup screen. Enter the IUI term in months. This term cannot exceed the term of the loan or the A&H term cap.
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I.U.I. Rates
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Enter the Involuntary Unemployment Insurance rate and select the rate type.
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$100/Yr
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Often referred to as prorate.
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100
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Per 100 (Same rate regardless of term)
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$1000/Mo
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Per $1000/Mo often referred to as MOB
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Last Payment Amt *
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*Note: This prompt is only active If the Finance Charge refund type is set to Actuarial.
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Enter the Last payment amount.
This is needed if the finance charge refund method is Actuarial and there is a different last payment.
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Lending to Military Personnel Disclosures
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Compute/Disclosure MAPR
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John Warner Defense Authorization Act (JWNDAA) effective 10/1/07 mandates the calculation and disclosure
of a "military APR" when making certain loans to military personnel and their dependents.
Three types of Loans must comply
• Payday loans
• Title loans
• Refund anticipation loans
Note: If this option is setup, a checkbox is visible on the loan input screen "Borrower is Military
Personnel/Dependent".
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Level Life Rates
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Type is determined by "Life Rate Type" section that also applies to the Decreasing Life Rates.
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Level On Net Balloon
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Net Balloons
This option is included to match some computer systems that do not have the ability to disclose only one premium
for net credit life insurance coverage. These systems expect to see a "decreasing" and a "level" premium whenever
a balloon transaction is insured with credit life.
The "level" portion consists of the balloon payment being subtracted from the scheduled principal balance each
month and insured as a separate piece. The "decreasing" portion of the coverage is the principal minus the balloon
payment each month. As long as the credit life rates in use are actuarially consistent, the sum of the two
"pieces" disclosed with this coverage will equal the net payoff premium computed without this option being turned on.
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Level Rate Option
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(Monthly Pmt Only)
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This option adds a prompt for Level Credit Life Insurance on standard monthly payments when Gross Insurance
is chosen.
Note: The Gross Insurance Coverage option must be turned on and the Prorate (rate $100/year) must be
enabled in order to be able to choose the Level option.
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Life Rate Type
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Types of Life Rates available to use when doing Credit Life Insurance Calculations.
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$100/yr
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Often referred to as prorate.
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$1000/mo
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Uniform monthly rate per $1000, often referred to as MOB rate.
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Tabled
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Table of rates for each term. Entered as per $100 (i.e. $2.20 entered as 2.20).
Warning: If $1000/mo or $100/yr is chosen with this radio button and there are no values entered
in the corresponding Rate value section (Monthly Rate -> Single Mthly Rate, Prorate -> Single Decr Rate)
then your calculations will not include any Life Insurance. Be careful to make sure the correct rate
has been selected and that there are values entered for that rate. Make sure that there is corresponding
B: rate values entered for the Rate type chosen here if B rates are being used (see the Use 'B' Rate Over
option below.)
Note: Choice also applies to Level Life rates if any are entered.
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Loan Amount
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The amount requested by the borrower. This does not include insurance or fees.
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Loan Min/Max Rates
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Minimum Rate
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Stops transaction with Warning Message "Interest Rate cannot be less than minimum rate".
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Maximum APR
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Stops transaction with Warning Message "APR is exceeding the maximum APR allowed, check your input please."
Note: Fees or time counting could be the reason.
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MAPR
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Military APR is part of the Military Lending Information to be disclosed per the John Warner
National Defense Authorization Act (JWNDAA).
The MAPR cannot exceed 36%. The Act defines interest for purposes of compliance. SmartPC uses the
actuarial method to compute MAPR.
Note: This is in addition to the TILA APR.
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Maximum Rate
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This option uses the Small Loan - Maximum Rates if they were entered in the Loan Setup section.
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Small Loan-Maximum Rates
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Note: For more information see Small Loan - Maximum Rates in the Glossary.
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Max Spread
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The Max Spread is the maximum that the bank allows the dealer to charge above the bank rate without penalty. If
the dealer charges more than the Bank Rate + Maximum Spread, then the bank collects ½ of the extra finance charges.
Note: This option is only available if the Dealer Reserve option has been turned on (see Dealer Reserve
option).
Turning this option on will display Max Spread and L.S.I. checkboxes on the Loan input screen.
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Mean Between
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Refund method available for Gross Life or A&H premiums.
(Pro-Rata refund + Rule 78th refund) / 2
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MOB
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Premium is remitted by consumer as a part of each payment and not financed as part of the loan principal.
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MOB A&H Rates
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A&H MOB Rate options.
Note: If both of these options are turned off then SmartPC will select Open End MOB automatically.
If both options are turned on then a prompt will appear in the Accident and Health insurance section to choose one or the other.
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Closed End
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Closed End MOB uses the A&H Rates from the Accident & Health Rate Schedule (see Accident &
Health Rates Setup section) to calculate the insurance payment on the MOB.
Tabled rates can be either per $100 or per $1000.
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Open End
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Open End MOB uses the dollar per thousand per month rate entered in the Single A&H MOB. Rate section
of the MOB Insurance Rates Loan Setup option (see MOB Insurance Rates Setup section).
Warning: Some insurers use different terminology for these terms, please read carefully and make sure the
correct option for the situation requested has been selected.
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MOB Calculation Types
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Life, AH, IUI, TPD on Principal
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All are based on principal balance.
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Life on Principal/AH,IUI,TPD on TOP
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Life is based on principal balance and AH, IUI and TPD are based on declining total of payments.
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Assurant Group
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Custom formula
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MOB
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Life Rate Type
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Options Per $100/yr or $1000/Mo
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Life Rates
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*B rates
A different life rate may be used over a given term or amount financed. (See Single Premium Insurance Rate setup screen)
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MOB Premium Posted Day
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Drop down box. Options include same day as posted or from the 1st thru 31st of the month.
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MOB
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Truncation (Capping) Method
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Level Decreasing
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Uses amortization schedule and the base of coverage to determine each period if maximum coverage amount should be
used in premium calculation.
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Proportional
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Ratio of decreasing life coverage over actual base applied to premium to truncate insurance. (I.e. if the base is
total of payments and the total of payments is $150,000 but the maximum coverage is $100,000, then 100,000/150,000
is applied to the premium to compute the final insurance amount.)
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Monthly Life Rates (Special Options)*
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Enter per $1000/mo rates to be used in conjunction with the *Use Monthly Rates for Gross over ___ months.
Note: These rates are for special calculations only. If you are using per $1000/mo rates for standard
decreasing coverage, enter them in the Decreasing Life Rates box and check $1000/mo.
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Pay-off Date
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Refunds
Enter the date that the loan was paid off in MMDDYY or MM/DD/YY format.
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Payments Per Year
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Select the number of payments per year (payment frequency). SmartPC will allow any of following:
1 = Annual
2 = Semi-annual
4 = Quarterly
6 = Bi-monthly
12 = Monthly
24 = Semi-monthly
26 = Bi-weekly
52 = Weekly
They will appear in a drop down menu on the loan input page. Single-click on the selection area and choose an option, or enter the first number of the option 1, 2, 4, 6, 12, 24, 26, 52 to select the value.
Example: pressing '5' will select 52 payments.
Note: See Loan Setup screen to enable these prompts.
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PPY (1,2,4,6) Insurance Rate Options
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Use decreasing rate for gross
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Premium uses decreasing life rate times total of payments for Annual, Semi-monthly, Quarterly and Semi-Annual
payments. Other available option is series of level life certificates that is the default setting.
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Series of Level Certificates for AD
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Series of Level Certificates for Accidental Death. If this is not checked, applies decreasing AD rate to total
of payments.
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Principal
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The total amount upon which interest is computed. May include fees, insurance premiums and "other amounts" as applicable.
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Pro-Rata
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Refund Type - earned in equal portions.
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Prompt for Add-On Interest
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A prompt for Add-on Rate will appear below Simple Interest Rate when entering a loan transaction if this option is turned on.
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Prompt for Closing Date
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If the Closing Date can be before the Interest Start Date, turn this option on. This option should be used if an interest free period is offered.
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Prompt for Payments per Year
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To prompt for payment frequencies other than monthly, select this option. If selected all the following options are available:
Weekly, Bi-Weekly, Semi-Monthly, Monthly,
Bi-Monthly, Quarterly, Semi-Annual, Annual.
Note: See Insurance Setup screen to add insurance options for payment frequencies other than monthly.
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Property Insurance Coverage
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Cash
Amount Financed
Total of Payments
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The Original Amount of Insurance for Property Insurance can be the Cash Value, Amount Financed or the Total of Payments.
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Property
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A No/Yes prompt for Property Insurance will be added to the Standard Loan Entry Screen if this option is
selected on the Insurance Options Setup screen.
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Property Rates
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Enter the Property Insurance rate and select the rate type.
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$100/Yr
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Per $100/yr often referred to as prorate
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100
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Per 100 indicates per $100 of property value, (same rate regardless of term)
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$1000/Mo
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Per $1000/Mo often referred to as MOB
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Show coverage options on output screen
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Adds Gross, Net and No Insurance prompt buttons (if applicable) to the output screen when the loan is
calculated.
Example: If a loan can be calculated with either Gross or Net life coverage (see the Standard
Loan Options section above) then prompting buttons will appear at the bottom of the loan calculation
screen that will allow the user to switch between Gross, Net and No Insurance.
Note: If only one form of life coverage is turned on then selecting this option will display one
prompt button at the bottom of the screen for No Insurance.
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Simple Interest Rate
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(Default prompt)
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The Simple Interest Rate is the interest accrual rate expressed as an annual rate as opposed to ADD-ON
(pre-compute) interest or DISCOUNT interest. Simple Interest is often referred to as Interest Bearing.
The use of a decimal is only required if the Interest Rate is fractional as in 12.25.
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Single Pay
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Maximum APR
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Allows user to set a maximum APR that applies to Single payments only. Note: There is a Maximum APR setting
under LoanMin/Max Rates that if set applies to all loan types but will be overridden in single payment
transactions if Single Pay Maximum APR is set.
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Maximum Loan Amt
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Sets a maximum loan amount for Single Payments only.
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Single Payment Program
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One Payment Only
Time counting methods for Single Payment Program only are either 365/365 or 365/360.
Note: There is a limit of 5 years on Single Payment Loans.
Note: The Single Payment Program must be selected in the Computing Options Screen.
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Single Payment
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Generally, the prima facie rates for level life coverage are published in the same format as the decreasing
life rates.
Example: The decreasing rate may be $.50/$100/yr and the level rate may be $1.10/$100/yr. You would
then chose the field marked $100/Yr, and the Single Level Rate A would be used.
If the level life rate is derived from an underlying rate per month per $1000 of coverage you would select
Monthly Rate ($1000/Mo.)
In a few cases (currently in Arizona) a level life is published as a rate per month per $1000 of coverage
and is a different value than the decreasing rate of the same nature. In this case Level Rate
($1000/Mo)(AZ) would be selected. This will use the value entered in Single Level Rate A.
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Small Loan - Maximum Rates
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Choose whether or not to use Small Loan - Maximum Rates (unique to your organization, and depends on the
Rates that you have filed with the State).
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Not Available
Simple Rates
Add-On Rates
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If Simple Rates or Add-On Rates are chosen here for this option, a Maximum Rate check box prompt will be
added to the Loan Input screen, and the Interest Rate will be calculated from the Rate information entered
here using the Edit Rates button that is only available if you choose Simple Rates or Add-On Rates.
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Edit Rates
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Edit Rates:
Use this window to enter up to six rates.
A maximum loan amount must be entered.
Example: To enter the following set of rates, 36% up to and including $300, 21% from $300 to $700,
and 15% over $700, with a maximum of $1000
Enter
36 at the 'Rate 1' prompt.
300 at 'Up to and including' prompt next to Rate 1.
21 at the 'Rate 2' prompt
700 at 'Up to and including' prompt next to Rate 2.
15 at the 'Rate 3' prompt.
1000 at the 'Maximum loan amount' prompt.
All other prompts should be left blank.
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Solve Type
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Options are Payment or Cash.
If Cash selected, then Amount Requested prompt changes to Payment Amount
Note: Not available if Multi-ins set
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State
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Choose the State used when entering loan transactions.
This is important for A&H rates. State name also appears on disclosure page.
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Time Counting/Daily Rate
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Time Counting Calendars
The following are the most common time calendars in use in the consumer finance industry. Each calendar
consists of two components represented by the numerator and denominator.
The numerator represents the time counting method or how a time interval is determined between two
dates. Example, from January 1 to January 31 is 1 month (1/12 of a year) in Month and Day time counting
but recognized as 31 calendar days with Actual Day time counting.
The denominator represents the daily rate of interest. The three allowable options are 1/360, 1/365,
and 1/364 (for use in weekly and bi-weekly situations). A daily rate of 1/366 is used, when appropriate with
certain time counting methods during a leap year.
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Month and Day/365
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The time counting method is monthly. Any date in a month to the corresponding date in the following month is
recognized as 1/12 of a year regardless of the number of actual calendar days. For example, March 15th to
April 15th is 1/12 of a year and the fact that there are 31 calendar days is not recognized.
Any days in excess of a calendar month are recognized as 1/365 of a year. Example: March 1st to April
15th is viewed as 1 month (1/12) and 14/365th.
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Month and Day/360
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The time counting method is monthly. Any date in a month to the corresponding date in the following month is
recognized as 1/12 of a year regardless of the number of actual calendar days. Example: March 15th to
April 15th is a 1/12 of a year and the fact that there are 31 calendar days is not recognized.
Any days in excess of a calendar month are recognized as 1/360 of a year. Example: March 1st to April
15th is viewed as 1 month (1/12) and 14/360th.
The excess days in Month and Day time counting represent what have traditionally been called "odd days".
The Month and Day method is often referred to as a "unit period" approach since it utilizes a month (1/12 of
a year) as a standard unit of measure.
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Actual Days to First Payment/365
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The time counting method counts the actual calendar days from the contract date to the scheduled first payment
date. Example: March 1st to April 10th would be recognized as 40 actual days.
The daily rate of interest for the counted calendar days is 1/365. In the above example, the first period
interest would represent 40/365 of the principal balance as the stated interest rate.
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Actual Days to First Payment/360
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The time counting method counts the actual calendar days from the contract date to the scheduled first payment
date. Example: March 1st to April 21st would be recognized as 51 actual days.
The daily rate of interest for the counted calendar days is 1/360. In the above example, the first period
interest would represent 51/360 of the principal balance at the stated interest rate.
Both the Month and Day and Actual Days to First Payment methods incorporate an irregular or odd first interval
from the contract date to the scheduled first payment date. All subsequent payments are assumed to be equal
intervals and are recognized as 1/12 of a year.
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Actual/365; 366 (Per Diem)
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The "Per Diem" designation means interest is computed on a daily basis. This is often called an "exact day"
computation since it recognizes the actual calendar days between each scheduled payment from the contact date
to the scheduled maturity date.
The 29th of February is counted during a leap year.
The daily rate of interest is 1/365 or 1/366 when appropriate during a leap year.
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Actual/365 (Per Diem)
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The "Per Diem" designation means interest is computed on a daily basis. This is often called an "exact day"
computation since it recognizes the actual calendar days between each scheduled payment from the contact date
to the scheduled maturity date.
The 29th of February is counted during a leap year.
The daily rate of interest is always 1/365 regardless of whether the year is a leap year.
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365/360 (Per Diem)
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The "Per Diem" designation means interest is computed on a daily basis. This is often called an "exact day"
computation since it recognizes the actual calendar days between each scheduled payment from the contact date
to the scheduled maturity date.
The 29th of February is counted during a leap year.
The daily rate of interest is 1/360 of a year.
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365/365 (Per Diem)
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The "Per Diem" designation means interest is computed on a daily basis. This is often called an "exact day"
computation since it recognizes the actual calendar days between each scheduled payment from the contact date
to the scheduled maturity date.
The 29th of February is disregarded when it occurs during a leap year.
The daily rate of interest is always 1/365 regardless of whether the year is a leap year.
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Fed Calendar/360
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This method incorporates the "Federal Calendar" as described in Appendix J of Regulation Z of the Truth-in-Lending
Act (TIL). While it was designed as a time counting method for the purpose of computing a TIL annual percentage
rate, on occasion it is implemented as a time counting method for computing interest.
The Fed Calendar differs from Month and Day in that the whole monthly periods are counted "backward" beginning
with the scheduled maturity date. Month and Day counts "forward" beginning with the contract date.
Any fractional periods, or "odd days', are counted from the end of the last whole monthly period to the scheduled
contract date.
The daily rate of interest is 1/360.
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Time Counting/Daily Rate verification tool
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If you are uncertain about the Time Counting/Daily rate that you want to use, you can see the payment for
the sample transaction for each of the available time counting/daily rate methods by selecting each one
from the drop down menu on the Payment setup screen and the payment for that type will appear in the box.
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Total of Payments
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The total of all scheduled payments due during the life of the transaction.
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TPD
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Total and Permanent Disability
Adds a None/Single/Joint prompt for TPD Insurance to the Standard Loan Entry Screen. TPD is calculated on
principal similar to Net Life.
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TPD Rates
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Total and Permanent Disability
Per $100 (flat rate based on per 100 coverage.
Per $100/Yr is often referred to as prorate.
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