How are finance charges calculated?
All retail installment contracts with CarMax Auto Finance are “simple interest” contracts. This means that finance charges, often referred to as “interest,” accrue daily, beginning on the date of your contract. Each time you make a payment, the payment amount is applied first to accrued finance charges. The amount of finance charge that accrues is calculated by multiplying the number of days between the last payment and the next payment by your individual daily per diem. The per diem is the amount of finance charge incurred “per day.” The formula is as follows:Current principal balance multiplied by your finance charge rate and divided by 365 (number of days in a year)Finance charge example: If your account has a current principal balance of $10,000.00 and a finance charge rate of 10%, your daily per diem is approximately $2.74, calculated from ($10,000.00) x (.10) / 365. This means that $2.74 in finance charges accrue each day. If a payment was last received on 6/1/07 and another was
A finance charge of 1.5% monthly will be applied to unpaid balances with the exception of students enrolled in the TMS Plan, in which case no finance charge is assessed unless the account is delinquent, in which case a 1.5% monthly finance charge will be applied. Your finance charge is calculated on the balance from your previous statement, less any payments made during the billing cycle. If you pay your bill in full each month by the payment due date you will not be assessed a finance charge.
We figure the FINANCE CHARGE on your account by applying the periodic rate to the “average daily balance” of your account (including current transactions). To get the “average daily balance,” we take the beginning balance of your account each day, add any new purchases, cash advances, and fees and subtract any payments or credits and exclude any unpaid Finance Charges. This gives us the daily balance. Then, we add up all the daily balances for the billing cycle and divide the total by the number of days in the billing cycle. This gives us the “average daily balance.
