Automated Financing Plan Calculator with Interest Rate Buy-Down
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Solution Overview
Problem
Conventional methods for calculating and determining financing terms in indirect vehicle financing transactions are cumbersome, time-consuming, and prone to human error, limiting the ability of car dealers to provide optimal financing options to customers and potentially leading to lost sales opportunities.
Innovation Solution
A computer-implemented system that determines loan payment amounts and interest rates based on initial loan amounts, terms, and payment frequencies, allowing for automatic recalculation of financing plans in response to changes in loan data or product selections, and enabling interest rate buy-downs using expected profits from aftermarket product sales.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Productivity
If manual calculation methods are used for determining financing terms, then the dealer can calculate loan payments and interest rates, but the process becomes cumbersome and time-consuming
Solution Approach 1:
The patent replaces manual mechanical calculation methods with an automated computer-based system. The processor automatically calculates loan payments, interest rates, and financing terms based on input parameters, eliminating the need for dealers to perform manual calculations with pen and paper or calculators.
Solution Approach 2:
The system enables self-service by automatically generating financing options and calculations without requiring dealer intervention in the computational process. The processor independently determines optimal financing terms based on predefined algorithms and input data.
2Adaptability or versatility
If the dealer manually recalculates terms when customer requests changes, then the transaction can be adjusted, but the laborious process causes time constraints to be violated
Solution Approach 1:
The system dynamically recalculates financing terms in real-time based on customer requests and changes. When parameters such as loan amount, term, or interest rate are modified, the processor automatically updates all related calculations immediately, allowing flexible adaptation without time delays.
Solution Approach 2:
The system provides immediate feedback when customer requests are made. The processor automatically recalculates and presents updated financing options based on changes, allowing the dealer and customer to see the impact of modifications instantly without waiting for manual recalculation.
3Productivity
If the dealer uses eye-balling technique to select interest rates, then the process is quick, but the transaction may be suboptimal due to guesswork
Solution Approach 1:
The system systematically evaluates multiple interest rate parameters and their impact on loan payments and dealer compensation. Instead of relying on guesswork, the processor calculates precise outcomes for different interest rate scenarios, allowing selection of the optimal rate based on quantitative analysis rather than estimation.
Solution Approach 2:
The system generates multiple simulated financing scenarios with different interest rates and calculates the outcomes for each. By creating and comparing these copied scenarios, the dealer can identify the optimal interest rate selection based on comprehensive analysis rather than single-point estimation.
4Measurement precision
If the dealer evaluates multiple financing options, then better terms can be found, but the extensive calculations increase the risk of human error
Solution Approach 1:
The patent replaces manual calculation mechanisms with automated computer-based processing. The processor performs all calculations electronically, eliminating human errors such as arithmetic mistakes, incorrect formula application, and data entry errors that occur with manual methods.
Solution Approach 2:
The system provides built-in validation and consistency checks throughout the calculation process. The processor verifies that all financing options meet regulatory requirements and internal constraints, ensuring reliable and consistent results across multiple evaluations.
Data Source
AI summary
Systems and computer-implemented methods are provided to determine recurring loan payments for a financing plan. The system is configured to determine a predetermined interest rate based on a comparison of the expected profits to configurable threshold profit levels; and compute a value for the recurring loan payments based on the initial loan amount, the predetermined interest rate and the predetermined term and frequency of payments. A new interest rate may be computed in response to receiving an interest rate buy down activation from a user device, wherein a portion of the expected profits is applied to buy down the interest. Comparative financing plans are generated including and excluding the sale of products wherein loan parameters and interest rates are adjusted so that the loan payments for a first financing plan are the same as or within a configurable range of the loan payments for a second financing plan.