Dynamic Interest Rate Buydown System for Vehicle Financing
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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 dealers to offer optimal financing options to customers and resulting in potential losses due to incomplete evaluation of interest rates and product sales opportunities.
Innovation Solution
A computer-implemented system and method that enables dealers to configure multiple financing plans by determining interest rates and applying profit settings to buy down interest rates, allowing for dynamic recalculation of financing terms based on product selections and loan parameters, facilitating the display of options to both dealers and customers.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If manual calculation methods are used to determine financing terms, then the dealer can calculate interest rates and financing options, but the process becomes cumbersome, time-consuming, and prone to human error
Solution Approach 1:
The patent replaces manual mechanical calculation methods with an automated computer-based system that performs interest rate determinations and financing calculations electronically, eliminating hand calculations and reducing both time and error
Solution Approach 2:
The system enables self-service calculation where the computer automatically determines financing terms based on input parameters without requiring manual intervention for each calculation step, allowing rapid generation of multiple financing options
2Adaptability or versatility
If the dealer manually recalculates financing terms when customer requests changes, then the transaction can be adjusted, but the laborious process causes time constraints to prevent offering multiple comparative options
Solution Approach 1:
The system provides dynamic recalculation capability where financing terms are automatically updated in real-time based on customer selections and changes, enabling rapid comparison of multiple scenarios without manual recalculation delays
Solution Approach 2:
The system pre-calculates and displays multiple financing options upfront, allowing customers to see various comparative scenarios before making decisions, eliminating the need for time-consuming sequential recalculations during negotiation
3Productivity
If the dealer uses guesswork to select interest rates under time constraints, then a decision can be made quickly, but the full range of options cannot be evaluated resulting in suboptimal transactions
Solution Approach 1:
The system performs preliminary evaluation of all available financing options and presents them to the dealer and customer, ensuring complete option analysis is completed before the decision-making process begins, eliminating guesswork while maintaining speed
Data Source
AI summary
Systems and methods are provided for enabling a dealer to configure a plurality of financing plans for a vehicle purchase by a buyer. A first interest rate is determined for a first financing plan for the purchase without any products. A selection of products to be purchased is accepted and the expected profits from their sale is determined, and a second interest rate for a second financing plan for the vehicle purchase with the products is determined, wherein the second interest rate is lower than the first interest rate. The system accepts a profit setting representing a portion of the expected profits that can be applied to lower the interest rate and facilitate the second financing plan for the purchase with the second interest rate.