Description

Assumptions

• It does not take into account any possible fees i.e. up-front fees or ongoing fees.
• Rental rate does not change over the lease term.
• Rental is calculated by compounding on the same payment frequency selected, i.e. weekly, fortnightly, monthly. In practice, rental compounding frequency may not be the same as payment frequency.
• It is assumed that a year consists 26 fortnights or 52 weeks which is counted as 364 days rather than 365 or 366 days.
• No rounding is done throughout calculation whereas payments are rounded to at least the nearer cent in practice.
• The final payment after the increase in payment amount will be a partial payment as required to reduce the loan balance to zero without negative owing amount.