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Selling Payment Options in a Tough Economy
From Calculated Industries - part two
The calculator is available at a 10% discount with free shipping at
www.calculated.com/nmn
Click here for advanced key strokes for those who do
desire speed or are familar with the Qualifer Plus IIx....
Qualifier Plus IIx keystrokes
Key strokes:
All of these calculations are based on an $80,000 loan amount.
Solving for the Start Rate payment of 1.95%
| Clear Calculator |
[On/C] |
[On/C] |
| Enter Loan Amount |
80[000] |
[L/A] |
| Enter Term |
30 |
[TERM] |
| Enter Rate |
1.95 |
[INT] |
| Solve for Payment |
[PMT] |
293.70 |
Solving for the Interest Only payment 4.95%.
Since you are not putting any money towards principal you will need to enter the same [L/A] (loan amount) into
[FV] (future value)
| Clear Calculator |
[On/C] |
[On/C] |
| Enter Loan Amount |
80[000] |
[L/A] |
| Enter Future Value |
80[000] |
[FV] |
| Enter Term |
30 |
[TERM] |
| Enter Rate |
4.95 |
[INT] |
| Solve for Payment |
[PMT] |
330.00 |
Solving for the 30 year payment at 6%.
| Clear Calculator |
[On/C] |
[On/C] |
| Enter Loan Amount |
80[000] |
[L/A] |
| Enter Term |
30 |
[TERM] |
| Enter Rate |
6 |
[INT] |
| Solve for Payment |
[PMT] |
479.64 |
Solving for the 15 year payment at 6%.
| Clear Calculator |
[On/C] |
[On/C] |
| Enter Loan Amount |
80[000] |
[L/A] |
| Enter Term |
15 |
[TERM] |
| Enter Rate |
6 |
[INT] |
| Solve for Payment |
[PMT] |
675.09 |
Now you can pitch the "cash flow" concept. Your client can pick a payment that fits their lifestyle or
investing strategy. For example, if the client was already paying $400 a month towards their $20,000 credit card
debt at 10%, it would take them about 5.4 years to pay it off. With the extra $180.93 (30 year payment - start
rate payment) applied to the credit card debt your client will now pay off the credit card debt in an estimated
3.4 years. The client will build up some deferred interest (aka negative amortization) by only paying the start
rate payment, but will have the opportunity to write off the interest.
Solve for the amount of time it will take to pay off their credit cards.
- Currently, they pay $400 a month towards credit cards.
- Credit Card Debt of 20,000
- Credit Card Debt of 10%
How long will it take to pay off credit card debt before your payment option
loan?
| Clear Calculator |
[On/C] |
[On/C] |
| Enter credit card payment |
400 |
[PMT] |
| Enter credit card debt |
20 [000] |
[L/A] |
| Enter credit card interest rate |
10 |
[INT] |
| Solve for the term |
[TERM] |
5.41 years |
| Solve for total interest |
[AMORT] |
[AMORT] 5,979.48 |
How long will it take to pay off credit card debt with their estimated
monthly savings of $180.93 added to their current payment?
| Clear Calculator |
[On/C] |
[On/C]. |
| Recall their current payment |
[RCL] |
[PMT] 400 |
| Add the est. mo. Svgs. |
$180.93 [+] 180.93 [=] 580.93 |
| Enter this new amount into payment |
[PMT] |
| Solve for the term |
[TERM] |
3.40 |
| Solve for total interest |
[AMORT] |
[AMORT] 3,669.55 |
How much deferred interest will your client accrue over 3.4 years?
| Clear Calculator |
[On/C] |
[On/C]. |
| Enter Loan Amount |
80[000] |
[L/A] |
| Enter Term |
30 |
[TERM] |
| Enter Rate |
1.95 |
[INT] |
| Solve for Payment |
[PMT] |
293.70 |
| Enter Note Rate |
6 |
[INT] |
| Enter Deferred Interest Term |
3.4 |
[TERM] |
| Solve for Deferred Interest |
[FV] |
84,797.88 |
What is the net result?
- Your client has paid off their credit card debt in 3.4 years vs. 5.41 years.
- Your client will pay $3,669.55 in Credit Card Interest vs. $5,979.48.
- Your client has only accrued $4,97.88 in deferred interest.
What if your customer says, "I have heard these loans can get me in trouble & what do I do with this new
loan amount of $84,797.88?"
This is true, it is important to teach your customer the reason why you want to pay off credit card debt immediately
and use the cash flow to their advantage. Here's why.
Now that you have shown your client how they can pay off their credit cards in 3.4 years by applying estimated
payments of $580.93, you need to show them how pay off their new loan amount of $84,797.88.
Solve for the $84,797.88 loan amount for a 30 year term at the Note Rate
of 6%.
| Clear Calculator |
[On/C] |
[On/C]. |
| Enter Loan Amount |
84,797.88 |
[L/A] |
| Enter Term |
30 |
[TERM] |
| Enter Rate |
6 |
[INT] |
| Solve for Payment |
[PMT] |
508.41 |
-----------------DO NOT CLEAR CALCULATOR---------------------
Lets say your client can afford to pay an extra $100 a month towards their
payment. What is their new Term?
| Enter additional funds [+] 100 [=] 608.41 |
| Enter into payment |
[PMT] |
|
| Solve for new term |
[TERM] |
19.94 |
Net result:
- Your client has paid off their credit card debt and their mortgage in 23.34 years!!!
Note: Check with your lender for program variables such as the re-cast period and payment caps. Rates
will fluctuate and may increase or decrease the values in this example.
The calculator is available at a 10% discount with free shipping at
www.calculated.com/nmn
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