What are Payment Factors?
Payment factors are values that allow us to calculate a loan's monthly payments. These are provided by lenders and the factors can vary by product, term, and APR. These factors usually take into account lender specific criteria, amortization, and early paydown (formerly ITC).
When a lender is non-integrated (i.e. we do not pull quotes from APIs) or a lender integration is disabled, an admin will enter in the payment factor for each loan product. To calculate monthly payments using payment factors, simply multiply the financed amount by the payment factor.
Here is an example:
Payment Factors for a 1.49%, 25y loan: First 18 Months: 0.2998% Post Month 18 with paydown: 0.2998% Post Month 18 without paydown: 0.4086% Gross System Cost: $45,000
Period | Factor | Monthly Payment |
First 18 Months | 0.2998% | $45,000 * 0.2998% = $134.91 |
Post Month 18 with paydown | 0.2998% | $45,000 * 0.2998% = $134.91 |
Post Month 18 without paydown | 0.4086% | $45,000 * 0.4086% = $183.87 |
NOTE: Sometimes lenders will provide payment factors not in % format, so there will be additional decimal places. For example, you could see a payment factor represented as 0.002998. Multiply by 100 to get 0.2998%.