Sighten calculates loan amount from the install cost inserted by the user and the dealer fees set on the product.
Calculation
Loan Amount ($) = (Install Cost ($) - Installer Paid Rebates ($) -Upfront Payment ($)+ Dealer Fee ($)
Dealer fees are calculated as a percentage of the loan amount (not of the install cost), as a result:
Loan Amount ($) = (Install Cost ($) - Installer Paid Rebates ($) - Upfront Payment ($)) + Dealer Fee (%) x Loan Amount ($)
And with some simple algebra:
Loan Amount ($) = (Install Cost ($)- Installer Paid Rebates ($) - Upfront Payment ($)) / (1 - Dealer Fee (%))
Example
You create a quote for a Demo Loan that has a 10% dealer fee.
You design a 15.120 kW system.
You input an install cost of $1.984/W, so the total install cost is $1.984/W x 15.120 kW = $30,000.
Loan amount, as per the formula above is thus $30,000 / (1-0.1) = $33,333.
That’s the number you’ll find in the proposal (below). All these numbers are rounded where they appear in the Quote and Proposal Phase.
Dealer Fee Questions/Concerns
Sometimes a customer will still be confused by the dealer fees - and continue to push back on the following points:
Why based on the loan amount and not install cost?
Why does Sighten do it this way?
The math seems circular - doesn’t make sense?
Below is a sample response sent to a customer who had all of those concerns. Feel free to modify it based on your customer’s specific concerns/job.
Hi (customer name)!
You have several statements/questions in your reply so I’ll try to answer them all - and yes, these fees are quite confusing; but it’s how the lending industry works. In fact, all lenders in the Sighten platform (and elsewhere) work this way.
Reference calculation (working backwards to solve for loan amount):
Loan Amount ($) = (Install Cost ($)- Installer Paid Rebates ($) - Upfront Payment ($)) / (1 - Dealer Fee (%))
1- Q: How can dealer fees be calculated based on a percentage of a loan amount rather than the actual cost of the project the loan is financing? Answer: If you think about it, this is more fair to the customer. For example, if they put down a large cash down payment (or get a large dealer incentive), it reduces the amount they need financed and therefore the dealer fee is also reduced, which reduces the overall cost to the customer. That’s why the fee isn’t calculated using install cost.
2 - Q: How can the dealer fee be added to the install cost when the dealer fee cannot be calculated until that fee is created by determining a percentage of a number (loan amount) that includes a yet unknown fee? Answer: Use algebra to solve for the unknown. Using the screen shot of the proposal you provided here’s how I did the math (using excel to run the calculations and grabbing the formulas from the link I provided):
Loan Amount = (B3-B4)/(1-B5)
Dealer Fee total = (Loan Amount -B3)+B4
Install cost (B3) | $ 104,927.00 (replace these numbers in your reply to those specific to the customer’s job) |
Installer paid rebate (B4) | $ 8,000.00 |
Dealer Fee (B5) | 18.65% |
Hope that helps!
(Your name)
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