To calculate finance is pretty easy...
Let's say you have you loan amount B, interest i and payment terms of n then the formula is as follows.
Installments = B x i x ((1 + i)^n)/((1 + i)^n - 1)
Just remember that interest is usually compounded monthly, so if it's 15% (which is 0.15 or 15/100) then i = 0.15/12 because there is 12 months in a year.
Now what happens with a residual value? Still easy, you pay a balloon amount in the end, but how do they make you pay more interest with the same interest rate then you can ask? I'll show you...
If they say you have a residual of 30% on let's say a R200 000 car, then you're final balloon amount you have to pay after the installment is then R60 000, but now you think you they calculate the loan installment from R140 000? Wrong, they calculate the loan amount from the following to get installments.
Load Amount = Total Loan - (Balloon Amount/((1 + i)^n))
So on the R200 000 car with a 30% residual the amount your installments will be calculated from is with lets say 60 terms and 15% interest:
R200 000 - (R60 000/((1 + (0.15/12))^60)) = R171525.94
To run through an example of both...
Without residual for the above mentioned conditions:
Intallments = R200 000 x (0.15/12) x ((1 + (0.15/12))^60)/(((1 + (0.15/12))^60) - 1) = R4757.99 pm
Total Cost = R4757.99 * 60 = R285479.40
With Residual:
Installments = R171525.94 x (0.15/12) x ((1 + (0.15/12))^60)/(((1 + (0.15/12))^60) - 1) = R4080.59 pm
Total Cost = R4080.59 * 60 + R60 000 = R304835.40
So now you should know they calculate it
