Downpayment, Interest Rate, APR: Explained
What You'll Learn
The difference between APR & Interest Rate
How down payments are calculated on Ascend programs
Examples of down payment calculations
What is the difference between APR & Interest Rate?
Interest rate refers to the annual cost of a loan to your insureds and is expressed as a percentage.
APR is the annual cost of a loan to the insured — including fees. Like an interest rate, the APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees such as service fees, doc stamp fees, etc.
Here is a sample APR calculator that helps to illustrate the difference between these two values:
How is the Down Payment Calculated?
The down payment is either:
Minimum Earned Percentage or 20% of the Total Quote Premium + Taxes & Fees
Plus Other Fees + Broker Fees + Policy Fees added to the amount above (these fees are non-financeable)
Example A
Premium = $10,000
Policy Fees = $100
Min Earned Rate = 15%
down payment =
20% of $10,000 ($2,000)
$100 Policy Fees
Total: $2,100
Example B
Premium = $10,000
Policy Fees = $100
Min Earned Rate = 25%
Is Auditable
down payment =
25% of $10,000 ($2,500)
$100 Policy Fees
+5% of $10,000 from auditable ($500)
Total: $3,100
Example C
Premium = $10,000
Policy Fees = $100
Min Earned Rate = 15%
Taxes and Other Fees = $200
down payment =
20% of $10,200 ($2,040)
$100 Policy Fees
Total: $2,140
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