On Disk Monthly 85/odm85.zip/LOAN.HLP

Text File | 1993-09-24 | 12KB | 236 lines

^C^IParameter Screen

The Parameter Screen is the first of the two major "action
screens" of Loan Accelerator Plus.  Here, you set up the basic
terms of your loan.  Use the arrows or ENTER to move between the
different fields (or click the mouse on the desired field), and
type in new values as appropriate.  There are nine fields, for
which you can supply values to all but one; the remaining one
will be determined by the values of the other fields.  To see
what value any field has as determined by the other fields'
values, you can press F6 while the cursor is on the field you
want to calculate.  (NOTE:  If you do not manually force a
calculation by pressing F6, then the Amount of Payment, or the
Number of Payments if you have manually entered the Amount of
Payment, will automatically be recalculated when you press a
function key to generate an amortization or print the
parameters.)

Note that the dates, number of payments per year, and calculation
rule cannot be calculated with F6, but must be entered manually
or allowed to default to their original values.

When you're done entering the parameters for your loan, press F10
to see the full amortization, described below as the Amortization
Screen.

Other applicable keys from the Parameter Screen are F1 to bring
up this help screen, F2 to toggle between sound and silent mode,
F4 to load a previously-saved amortization (see the documentation
on the Amortization Screen to find out how to save one), F5 to
print the parameters as currently entered, F9 to show the "About"
text file you saw on first running this program, and ESC to exit.

Clicking with the mouse on any of the keys shown on the bottom of
the screen is equivalent to pressing that key.

The fields on the Parameter Screen are as follows:

^1Amount of Loan
Enter the total amount you have borrowed, also known as the
principal amount.

^1Ending Balance
Enter the amount you want to remain as the unpaid balance at the
end of the term of the loan.  Usually this will be zero, but if
there is a "balloon payment" at the end, you can use a nonzero
amount.

^1Payments per Year
Enter the number of payments you will be making every year.  This
will normally be 12 for a monthly payment, but you can enter
other values like 6 for bimonthly, 1 for annually, or 52 for
weekly.  Press F8 for a "pick list" of payment intervals, or type
in a number yourself.  (In the pick list, use the up and down
arrows to move between the choices, and ENTER to select one.)
NOTE:  Canadian loans often use biweekly payments (26 per year).

^1Number of Payments
Enter the total number of payments over the course of the loan.
You can press F8 for a "pick list" of common durations.  A 30-
year loan with monthly payments totals to 360 payments; this
common number is the default for this field.

^1Date of Loan
Enter the date on which the bank lent the money.  (E.g., the
closing date for a home mortgage, or the date the bank paid out
the loan amount.)

^1Date of First Payment
Enter the date on which the first loan payment is due.  Note that
the number of days between the date of the loan and the date of
the first payment will affect the amount of interest paid over
the course of the loan, and hence the amount of payment needed to
amortize the loan over a given period.  This is a fact that is
ignored by most computerized loan amortization programs, but the
banks are well aware of it and often try to increase their
interest collections by convincing you to wait a bit longer for
the first payment, e.g., the 5th of the month instead of the 1st.
The exact effect of such a daily variation will depend on the
interest calculation rule that is used (see below), but it can be
a significant difference.  Try running amortization schedules for
the same loan with different time spans between loan date and
first payment date to see the effect.

^1Annual Percentage Rate
Enter the interest rate of the loan, in terms of a percentage
with up to two decimal places.  This is the interest rate per
year, not the periodic rate per payment.

^1Amount of Payment
Enter the amount you wish to pay every period.  Usually, you will
not enter this manually, but will enter the other fields and let
this be calculated, but you can choose to enter a payment amount
and then calculate the number of payments, interest rate, or
ending balance that would result.

^1Calculation Rule
There are several different methods banks use to calculate the
interest of a loan.  Three such rules are supported by this
program, Mortgages, Commercial Loans, and the Rule of 78.  Toggle
between them by pressing the Space Bar while on this field.

The Mortgage rule calculates the interest for each payment period
by dividing the annual percentage rate by the number of payments
per year.  No interest compounding is done within a payment
period, and there is no variation in the interest due to the
varying lengths of the months which cause the number of days
between payments to vary.  Each payment period is considered
equal in length for the purpose of interest calculation.  Only on
the first payment is the exact number of days used in interest
calculations, and in this case it is figured based on a mythical
360-day year, so that an interval of 30 days between the loan
date and the first payment is needed for the interest to exactly
equal a normal monthly allotment of interest.  Usually, this rule
is used on home mortgages.

(EXCEPTION:  For loans with payment intervals that are multiples
of a week, such as the biweekly amortizations that are common in
Canada, a 364-day year is used, so that a 14-day interval will
make a biweekly amortization "come out right".)

The Commercial Loan rule calculates the interest by compounding
it daily, using the exact balance at any given time and the exact
number of days between all payments.  A regular 365-day year is
used (which means you pay slightly extra on leap years).  Thus,
the amount of interest will be higher after longer months
(assuming a monthly payment interval).

The Rule of 78 is still occasionally used, though it is a big
rip-off to the consumer, as you'll see from amortization
schedules under this rule.  The total interest is calculated as
with the regular Mortgage rule, but it is then allocated to the
payments based on the sum of the payment numbers; the total
interest is divided into 1 + 2 + 3 + ... + n parts, where n is
the number of payments, and the first payment is considered to
include n parts, the second n-1, down to the last payment which
includes one part of interest.  This rule ends up "loading" the
interest disproportionally into the early part of the loan, to
the extent that you are often actually increasing the principal
amount owed for quite a while into the term of the loan.  This
means that if you wish to pay the loan off early, you must pay a
large penalty.
^P

^C^IAmortization Screen

The main action of Loan Accelerator Plus is in this screen.

You will see the first screenful of amortization data, comprising
the first eighteen payments.  For each payment, its date, amount,
breakdown into principal and interest, total interest paid to
date, and remaining principal balance are shown.

NOTE:  The last payment may not exactly equal the other payments
due to the rounding off to the nearest cent of interest and
principal of earlier payments.  In some extreme cases involving
particularly high interest rates or low principal amounts, the
number of payments may differ from that on the parameter screen
due to these round-offs.  Also, amortizations under the
Commercial calculation rule are likely to have a widely variant
final payment or number of payments due to the effects of the
varying-length months.  These effects increase with higher
interest rates.

You can scroll and page through the amortization with the up and
down arrows and the PgUp and PgDn keys.  Home brings you straight
to the top of the amortization, and End takes you to the bottom
of it.  F2 toggles between sound and silence.  F3 lets you save
this amortization schedule for later reference, and F4 lets you
retrieve a previously-saved schedule.  F5 prints out the whole
amortization (be sure to get your printer ready, and place it at
the top of a page, since the printout is formatted with page
breaks), and F10 displays a brief summary screen giving
information on the loan (which you can print out by pressing F5
while it is displayed; this summary information is also printed
automatically at the beginning of the full amortization
printout).

Now we get to the heart of Loan Accelerator Plus, the ability to
see the effect of added payments.   You'll note that, on the
Amortization Screen, the input cursor is in the Payment column.
You can type a number there to change the amount of a payment.
Let's say the cursor is on payment #6 of the loan, and its
scheduled amount is $321.85.  If you want to see what would
happen if you paid $400 instead, type in 400 (press ENTER to
finish your entry).  Immediately, all the amortization numbers
from that point onward will be adjusted to reflect the change.
You'll find that the loan gets paid off earlier than before, and
the total interest is less.  To find out exactly how much less,
look at the F10 summary screen, or make a printout of the
amortization; the exact savings are shown.

If you want to add a fixed amount to a payment, you can type
"+100" to add $100 to its prior value.  This will work in general
for any numeric input throughout this program; if you type a
number preceded by "+" or "-", the amount you type will be added
or subtracted from the prior value of the field.

Press F6 to restore a changed payment to its "regular" value.

To see the effect of a repeated change in payments (e.g., paying
$400 instead of $321.85 every month for a year, or for the
remainder of the loan), press F7.  This will bring up a box in
which you can input the number of times to repeat the payment at
the point of the cursor.  You should first type in the payment
amount you want to repeat, then press F7 while the cursor is on
the payment you just changed.

If you are using the Commercial calculation rule, you may also
change the dates of individual payments by moving into the
Payment Date column and editing the dates there.  This causes the
payments to be recalculated based on the given payment being made
at a different time (and hence incurring a different amount of
interest).  You can't change dates under the Mortgage or Rule of
78 calculation rules, as these rules calculate interest without
reference to the exact dates of individual payments other than
the first payment (which is already specified in the Parameter
Screen).

You can move to any editable field (the payment amounts, and the
dates if using the Commercial calculating rule) with the arrow
keys, the Tab key, or by clicking on an editable field with the
mouse.

To exit the Amortization Screen and return to the Parameter
Screen, press ESC.  Note that when you do this you will lose any
changed payment data you have entered, unless you have pressed F3
to save it to a data file.

The Save and Load features bring up screens showing you a list of
loan data files you have already saved.  All files are saved
using a file extension of ".LAC", but this isn't shown on the
screen.  Files are saved and loaded in the same directory as
the Loan Accelerator Plus program itself.