Main Menu - Lease - Extend
This function is only available for leases.
Used to manually extend the lease, with the same payment, for a period of one to twenty-four payments. (For automatic lease extensions, see the Miscellaneous Lease Information screen.)
Please note that for non-monthly payments, the new end date will be set to the date of the last scheduled payment.
Situations occur that make it necessary to allow the lessee to have the vehicle for longer than the original lease contract. ALMSys allows for such a contract extension.
Follow these guidelines to extend a lease:
1. Wait (if possible) until the lease has been billed through the current term.
2. Print out a payment history.
3. Print out an amortization schedule.
4. Extend the lease immediately after billing for the term. (Or, at least in the same balancing cycle.) (See LEV explanation below.)
5. Use the Check List on the Lease Extension report.
Lease extensions cannot be reversed, so make sure that you have a good backup before you start and that you are sure you are extending the correct deal.
Leases that contain non-taxable portions (such as capitalized insurance) cannot be extended. Leases with payment adjustment type "Z"s (principal adjustment) cannot be extended.
Leases with LEV
If the lease has an LEV amount (look at the end of the Amortization Schedule) AND you have billed for the term of the lease, then you will need to rebalance if the lease extension is performed in a balancing period other than when the term was billed.
"John Doe" has a 24 month lease.
He was last billed on June 20th for month number 24.
He has a standard calculation lease with a $45.25 LEV.
Today is July 10th.
Balancing for June was done already.
The lease needs to be extended for 3 months.
When the billing was done on the 20th, credit was given to interest income for the $45.25 LEV amount. (The asset account was subsequently debited.) This is done to bring the lease in line with the lease end value (residual).
When the lease is extended, the amortization schedule will be modified to add lines 25-27 and a new LEV amount will be calculated. In order to accomplish this, the original LEV amount must be removed (by ALMSys). This causes the $45.25 transfer to be reversed, which must be manually reversed in your ledger.
To correct this, simply debit interest and credit asset for the $45.25.
Again, this only needs to be done if the period in which the term billing was done has already been balanced.
Running Out of Principal (Asset)
Leases may be extended indefinitely. Should you reach the point in the amortization where no principal is remaining, the entire base payment will be treated as interest income. For lease type "1", the LEV is zeroed out and becomes inactive.