APR Targeting

Introduction

The APR Targeting tool lets you choose an APR amount and then adjust either the loan interest rate or the total escrow amount in order to get the loan as close to the chosen APR as possible without going over. This is especially useful for complying with laws that require an APR to be under a certain threshold.

Keep in mind that this is an iterative process. The system rapidly guesses and checks different options until it zeroes in on the exact APR you're looking for. This means that it's running one calculation after another, so it can take a few seconds to calculate.

Using Targeted APR

The APR Targeting tool is accessed within an individual loan. In LMS, use the Loan Manager to select a loan, then select Account Setup > Setup Terms. The Targeted APR tool is only available on inactive loans. (If a loan has already been activated, you'd have to inactivate it before using the Targeted APR tool.)

In the Summary section, click the TIL Tools drop-down and select Targeted APR. This opens up a dialogue window with two fields: Desired APR and Solve With.

'Desired APR' is pretty self-explanatory. The 'Solve With' drop down lets you choose whether to solve using an interest rate or escrow amount. If you don’t have any escrow buckets with the “Include in APR” setting set to “Yes” for this loan, no escrow buckets will appear in the drop-down. Enter your target APR into the “Desired APR” field. Click 'Targeted APR' to solve for your desired APR.

This tool will solve for APR to two decimal places. Because rounding up would cause you to get a higher APR than you were aiming for, it instead truncates your input, cutting off any digits past two decimal places. That means if you enter a desired APR of 15.0987, it will only solve for an APR of 15.09.


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