End of Term

End of Term provides users with essential functionalities for managing contracts as they approach their conclusion. Features within this menu are Early Payout and Residual Value Extension.

• The Early Payout option enables users to settle their contracts before the scheduled end date, offering flexibility for those seeking to conclude agreements ahead of time.

• Residual Value Extension provides users with the option to extend the term of the contract by adjusting the residual value.

Early Payout

Early Payout empowers users to settle contracts before their scheduled end dates, providing flexibility, control and allowing users to manage their contracts more effectively. By offering various early payout calculation methods such as Daily Future Interest, Effective Annuity and Net Receivable users can make informed decisions based on their specific needs and financial circumstances.

End of Term Early Payout

1. ET calculation Methods refers to the method used for early payout calculations.

   • Daily Future Interest: Calculates the early payout amount based on the interest accrued for each day between the early payout date and the contract's original maturity date.

   • Effective Annuity: Calculates the early payout amount using an annuity formula, taking into account the remaining contract balance, interest rate, and remaining term.

   • Net Receivable: Calculates the early payout amount by subtracting the present value of future contractual cash flows from the current fair value of the contract.

2. Interest Rate is a percentage that represents the cost of borrowing funds from a lender. It is applied to the principal amount of a loan or credit agreement. The interest rate is one of the key factors that determine the total cost of borrowing and influences the amount of interest you will pay over the loan term.

3. The Overdue Interest Rate is the rate applied to any outstanding payments that are overdue beyond their due dates. This rate is typically higher than the standard interest rate to encourage timely payments and compensate for the increased risk associated with late payments.

4. Total Overdue Amount refers to the sum of all payments that are past their due dates and have not been paid. This includes the principal amount, as well as any accrued interest or fees associated with the late payments.

5. Early Payout Quote Generation Date the date on which early payout quote is generated. By default, current date is displayed.

6. Client Date the date for which early payout quote is generated on customer request. By default, current date is displayed.

7. The Purchase and Return Decision refers to the option for a client to decide whether they want to purchase the asset at the time of early contract termination or return it to the lender. This decision determines the final resolution of the contract and the client's ownership status of the asset.

8. Asset Price refers to the value assigned to the asset when calculating the early termination amount.

9. Early Termination Penalty Method refer to the method used to calculate penalty amount charged for ending a contract before its scheduled completion date.

   • Percentage: Penalty calculated as a percentage of the specific amount on the contract. In this case user is required to select ET Penalty Reference Amount for Percentage i.e. the reference amount on which percentage is applied for penalty calculation. Options available include Principal Outstanding, Future Interest and Asset Plus VAC. ET Penalty Percentage refers to the percentage applied for penalty calculation.

   • Amount: Fixed penalty amount in the contract for early termination. In this case user is required to input ET Penalty Amount.

   • No. of Days Interest: Penalty calculated based on the interest accrued for a specified number of days. In this case user is required to input No. of Days.

10. Sundry Charges, Additional Charges, Late Payment Penalty, Security Deposit and Unallocated Amount refer to respective charges and their amounts.

11. Upload Repayment Plan is used to upload repayment plan for early payout calculations.

12. Click on the Calculate button to view Early Payout details.

Residual Value Extension

Extend Residual Value refers to the option to extend the residual value of an asset at the end of a lease or finance agreement. This option allows the lessee or borrower to continue using the asset beyond the original contract term by adjusting the residual value, which is the estimated value of the asset at the end of the contract.

Residual Value Extension

1. Rental Calculation refers to methods used to calculate rental payments. The specific method used can depend on factors such as the type of property, local market practices, and the terms agreed upon between the lender and borrower. Rental calculation methods include annuity, annuity - actual 360, annuity - actual 365, flat and equal principal.

   • Annuity is a series of regular rental payments over a specific period.

   • Annuity - Actual 360 is a series of regular rental payments over a specific period where the year is assumed to have 360 days.

   • Annuity - Actual 365 is a series of regular rental payments over a specific period where the year is assumed to have 365 days.

   • Flat is a straightforward approach where the borrower pays a fixed, constant amount of rental payment throughout the lease term.

   • Equal Principal is a way to determine rental payments where the principal amount is evenly distributed over the lease term.

2. Payment Mode refers to how the payments on a loan or credit agreement are structured. Two common payment modes are "advance" and "arrears."

   • Advance Payment Mode: In advance payment mode, the borrower makes the payment at the beginning of the specified period. For example, if you have a monthly payment schedule and the payment mode is set to advance, you would make the payment at the start of each month. This means that the payment covers the upcoming period of time.

   • Arrears Payment Mode: In arrears payment mode, the borrower makes the payment at the end of the specified period. Using the same example of a monthly payment schedule, if the payment mode is set to arrears, you would make the payment at the end of each month, after the period has elapsed.

3. Payment Frequency refers to how often you make payments on a loan or credit agreement. The frequency can vary depending on the terms of the agreement and the preferences of the lender and borrower. Payment frequency options include weekly, fortnightly, monthly, quarterly, semi-annually and annually.

   • Weekly: Payments are made on a weekly basis, with 52 payments in a year.

   • Fortnightly: Payments are made every two weeks, resulting in 26 payments in a year.

   • Monthly: Payments are made once a month, with 12 payments in a year.

   • Quarterly: Payments are made every three months, resulting in four payments in a year.

   • Semi-annually: Payments are made twice a year, with two payments in a year.

   • Annually: Payments are made once a year, resulting in a single payment in a year.

4. Residual Value refers to the estimated value of an asset at the end of its useful life or lease term. It is commonly used in leasing or financing agreements, particularly for assets such as vehicles, equipment, or real estate.

5. The Contract Duration in Months refers to the length of time for which a loan or credit agreement is valid. It represents the agreed-upon period during which payments will be made until the loan is fully paid off or the credit agreement is fulfilled. The contract duration can vary depending on the type of loan, the lender's terms, and the borrower's preferences. For example, a common contract duration for a personal loan or a car loan could be 12 months, 24 months, 36 months, or longer.

6. Interest Rate is a percentage that represents the cost of borrowing funds from a lender. It is applied to the principal amount of a loan or credit agreement. The interest rate is one of the key factors that determine the total cost of borrowing and influences the amount of interest you will pay over the loan term.

7. Would you like to add tax? facilitates to choose whether tax will be included or not at the time of residual value extension calculations. If tax is added then it is required to define a Tax Rate % for tax calculation, select option from Is Tax Inclusive drop down list (options Yes and No) and select option from Rental Component for which tax will be calculated. Options available for Rental Component include Rental, Interest and Principal.

8. Upload Excel File is used to upload excel file for residual value extension calculations.

9. Click on the Calculate button to view Residual Value Extension details.