A popular loan product is the “Flex 12-3” loan, which offers a homeowner no payments for the first 12 months, although interest does accrue in this period. This loan re-amortizes at 12, 24 and 36 months (3 re-amortizations → hence 12-3). A prepayment of 30% at 12 months is optional but often assumed for the estimated monthly payment.
Aurora doesn’t currently model the multiple re-amortizations but you can model a loan with no payments for the first year and 30% prepayment on month 12 as a “combination” loan.
*Note: We recommend creating your Flex Loans in the Legacy version of Aurora.
- Go to your account Database. Click on Financing Products, then Add Financing Product. Give your template a descriptive name. Click Create.
- Click Add Loan.
- Give your loan a descriptive name that you will later be able to understand.
- Principal Percentage should be set to 70%. Loan Type should be set to No Payment.
- Input your Dealer Fee, Interest Rate, and the Duration of the loan. Click Save.
- Again, click on Add Loan but this time select Bullet loan type.
- Principal Percentage should be set to 30% (this is the amount of the Federal Tax Credit).
- Input your Dealer Fee and the Duration of the loan. Duration will usually be 12 to 18 months - whenever the 30% payment is due. Interest Rate should be set to 0%.
- Click Save.
To estimate the monthly payment for the scenario where the 30% prepayment is not made at month 12, you can duplicate this loan, delete the Bullet loan and make sure to set Principal = 100% for the No Payment loan.
Please note that in this example, the total loan term is 26 years. If your default Project Life is 25 years, you may need to increase the Project Life in Settings > Financing settings.