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<< Click to Display Table of Contents >> Reserve as a Mark-up from Buy Rate to Sell Rate |
  
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<< Click to Display Table of Contents >> Reserve as a Mark-up from Buy Rate to Sell Rate |
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*Setting Lien Holder Defaults :
A. The Interest Rate charged by the Lien Holder.
B. The percentage of the Mark-Up that determines the actual reserve amount.
( C. In some circumstances the bank will require the Ratio Method for Mark-up. NEVER use this unless told to do so by a bank. See As a Mark-Up Using the Ratio Method for details.)
*Below is what the actual sales screen looks like when using the Flat Amount method:
EXAMPLE: This is how Frazer calculates the reserve as a mark-up.
Finance Charge |
$2479.76 (15% APR on a total amount to finance of $10,000.00) |
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Bank Buy Rate |
The Bank’s Buy Rate in this example is 8%. At an APR of 8% there would be a finance charge of $1280.96 |
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Sell Rate |
15% (The actual finance charge of $2497.76) |
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Reserve Rate |
50% (The percent the bank will hold in reserve) |
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Method |
SellRateFinance – BuyRateFinance = TotalSpread * PercentHeld |
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CALCULATION |
((15% APR of $10,000) – (8% APR of $10,000)) * 50% |
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($2479.76 - $1280.96) * .5 |
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$1198.80(Total Spread) * .5 |
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Reserve Amount is |
$599.40 |
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