How TermIQ calculates

Effective July 2026. Every figure on this page is produced by the shipped engine and verified by the automated suite that runs before each deployment.

This document exists so you don't have to take our word for anything. It states the conventions TermIQ uses, and section 8 shows you how to reproduce our published figures in tools you already trust.

• 1. The core identity
• 2. Compounding and compute methods
• 3. Structures and cash flows
• 4. Points, commission, and sell rate
• 5. Reverse solve and Solve For
• 6. Working-capital factor pricing
• 7. What runs before every deploy
• 8. Verify it yourself
• 9. Scope

1. The core identity every quote must satisfy

Before any quote is shown to a representative, it must satisfy one invariant:

This present-value identity holds across level payments, step plans, seasonal skips, interest-only introductions, advance payments, residual structures, rate schedules, and exact-day accrual — computed with per-period discount factors so it survives a varying rate or a varying period length. It is asserted throughout the automated test suite, which means a quote that breaks time-value-of-money consistency cannot ship.

2. Compounding and compute methods

Normal (default)

Periodic rate = nominal APR ÷ payments per year; daily frequency uses a 365-day year. Interest for a period is the opening balance times the periodic rate; the payment covers interest first, principal second. This is the U.S. equipment-finance standard.

Canadian

The statutory semi-annual (or annual) compounding basis: the nominal rate is converted to the equivalent effective periodic rate before amortizing.

U.S. Rule

True simple interest — accrued interest is never capitalized. Because no closed form exists under U.S. Rule with irregular structures, TermIQ solves the payment by bisection against the full simple-interest schedule.

Rule of 78

Sum-of-the-digits allocation of a precomputed finance charge. TermIQ deliberately restricts Rule of 78 to plain level schedules — no deferrals, skips, advances, steps, or residuals. The Rule of 78 is defined on a precomputed level contract; extending it to irregular schedules produces numbers with no accepted meaning, so a validation message enforces the restriction rather than printing a figure nobody could defend to an auditor.

Day counts and calendars

Year lengths of 365, 364, or 360 days; actual-day or 30E/360 date counting; odd-days interim interest from the funding date to the start of the first regular period, computed straight-line at the sell rate on the selected basis, added to cash due at signing and shown in the schedule, summary, and proposal. Payments may be in arrears or in advance, with advance-payment counts up to 24.

3. Structures and cash-flow treatment

Residuals

EFA/loan ($0), $1 buyout, 10% PUT, FMV as a percentage or a dollar amount, and fixed buyouts all close the amortization exactly to the selected maturity balance. The final cash payment carries a cent-level rounding adjustment so the schedule lands precisely on the purchase option — every published schedule ends at the stated balance to the penny.

Step payments and multi-tier structures

Introductory payments are known cash flows. Interest accrues on the outstanding balance each period, and the remaining balance is re-amortized over the remaining scheduled periods. Because the ending balance is affine in the unknown payment, the post-step payment falls out of a closed-form solve — no iteration, no approximation. Multi-tier structures (fixed-dollar tiers, percentage-change tiers, interest-only tiers, no-payment tiers) generalize the same construction, with the final tier auto-solved so the schedule reaches the purchase option exactly at the original maturity.

Skips, deferrals, and advances

Seasonal skip months accrue interest with no payment. Interest-only introductions extend the term under a documented convention. Advance payments are collected at signing at the regular (post-step) payment amount and replace final payment slots — the standard first-and-last convention — and are treated as time-zero cash in all pricing and compensation math.

Security deposits

Cash due at signing, held separately: never financed, never in the payment, never in the finance charge or compensation math, always in cash due at signing and on the proposal.

Guardrails

If an introductory payment falls below accrued interest, TermIQ flags negative amortization rather than hiding it. If a structure leaves nothing to solve — tiers consuming the full term, advances consuming every slot, front-loading with no positive remaining payment — the quote is rejected instead of producing a misleading number.

4. Points, commission, and the sell rate

One point equals 1% of equipment cost for equipment finance, or 1% of the funded amount for working capital. TermIQ does not add points to the APR. Instead:

1. The customer's actual scheduled cash-flow stream — steps, skips, interest-only periods, advances, and residual included — is discounted at the funding source's base APR.
2. The lender advance equals that present value plus time-zero advance cash.
3. Estimated commission = lender advance − amount financed; points = commission ÷ equipment cost.
4. Entering a points or commission target reverses the same computation: TermIQ solves the sell APR at which the customer's stream, valued at the base rate, produces exactly the requested compensation.

Pricing below the base rate reports the buydown — the subsidy the funding source must accept — as the mirror of commission.

Because the solve discounts the actual stepped or skipped schedule rather than a level approximation, the same 2.00-point target produces a different solved sell APR on a step plan than on a level plan. That is correct, and per-option APR disclosure on the proposal reflects it.

5. Reverse solve and Solve For

Reverse solve finds the equipment cost affordable at a target payment by bisection on cost. Universal Solve For extends the same discipline to any single unknown: payment, equipment cost, shortest qualifying term, residual or balloon, or the implicit rate — the uniform APR embedded in a known payment stream, recoverable even through tiered structures. Every solve is verified by rebuilding the full schedule at the solution and checking the ending balance.

6. Working-capital factor pricing

Factor deals price as payback = funded amount × factor rate, allocated over the schedule; factor points follow the industry convention of one point equalling +0.01 on the factor. Reconciliation to the selected payback is exact subject to cent rounding. Imported factor rate cards, recognized when buy factors fall in the 0.95–2.6 band, price on this same basis.

7. What runs before every deployment

TermIQ's deployment pipeline refuses to publish until three suites pass on the build server:

Rounding policy: interest is computed at full precision and rounded to the cent per period; the final payment absorbs the residual cent so the schedule closes exactly.

8. Verify it yourself — the twenty-minute reconciliation

Every figure below is produced by the shipped engine. Reproduce them in any established time-value-of-money tool — a dedicated amortization package, Excel, or an HP-12C — and confirm they agree. If any figure fails to reconcile in your own tools, we want to hear about it.

9. Scope

TermIQ is a standalone pricing, amortization, and proposal aid. Its outputs are internal pricing estimates and customer illustrations — not credit approvals, funding commitments, or tax advice, and not a substitute for the funding source's approved rate card, which representatives should verify before client delivery. Compute-method availability differs by workspace: the Quote Builder carries Normal, Canadian, U.S. Rule, and Rule of 78; Advanced Structures carries Normal compounding with periodic or exact-day accrual.