How Payment Skips Work
Payment skips allow the customer to have predetermined periods where a payment is not required. Examples of this would be allowing teachers to not make payments during the Summer, or by allowing cold weather customers to not make payments during Winter. You may also use the payment skip screen to provide special payment amounts (for loans only) for any period of the term.
Skips are built into the amortization schedule. For those periods that are skipped, interest is still charged, but offset by negative principal. For a lease, this would add to the principal owed. It would show this way for a loan as well, but loan balances are always calculated based on outstanding principal and current accrued interest. The amortization schedule for a loan works more like a "suggested payment schedule" and the principal and interest breakdowns for a loan are estimates only.
Special payments are also built into the amortization schedule. Interest is still charged and the principal is calculated as SPECIAL PAYMENT AMOUNT minus INTEREST. Again, loan balances are always calculated based on outstanding principal and current accrued interest. Special payment amounts are not allowed on leases.
Skips and special payment amounts should be part of your contract with your customer.
Where to Set Up Skips
ALMSys Add New Deal
Skips are set up only when the new deal is being input. Start by adding the new deal as you would normally do. When you get to the Calculate page, go ahead and enter the deal values, first and second payment dates, taxes, and charges as you would normally do. Make sure the values are accurate and then press the Calculate button. (Do not worry about the calculated results; just make sure that the base calculation values are accurate.)
Go to the Amortization Schedule subpage. At the top of that page, click the Set Up Payment Skips button. This will take you to the Payment Skip Schedule screen with the current amortization schedule loaded on the screen.
Skips are set up on the Scenario screen. Scroll to the bottom of the scenario and click the Set Up Payment Skips button. (If that button is not there, then it needs to be turn on on the defaults screen.)
Screen Layout and Function
On the left side of the screen, there is a Months to Skip panel with check boxes for each month of the year. If your skips are to be based on calendar months, then simply check the months that are to be skipped and then click the Apply button. The skipped months will appear in yellow in the amortization schedule.
To skip a specific line in the amortization, click on that line and then click the Skip Indicated Line button above the grid. Any line which has been marked for skip may be cleared by clicking on that line and then clicking the Clear Indicated Skip button.
For loans with special payment amounts for specific periods, enter the special payment amount into the Special Payment box. Then, click the line in the amortization schedule where this payment is to be placed, and click the Apply to Selected Row button. (The Clear Indicated Skip button will reverse this action.)
Once you have marked all of the periods in the amortization that are to be skipped or marked with special amounts, click the Calculate button. The amortization schedule will be recalculated, based on what you entered.
If you realize that you made a mistake after the Calculate button has been pressed, then you will need to exit ("x") out of this screen, go back to the Calculate - Main (or Scenario) page, and re-calculate the deal. Then, go back to the skips screen and start over.
If the new base monthly payment is different than what you want, then you may enter the amount you want into the Desired Payment box and click the Apply button. This action will tweak the interest rate until it reaches your desired payment amount. (Taxes and other defined additional monthly payments will be added on top of the base payment.)
Use the Print button to print off the amortization schedule (ALMSys only. In Quotes, print the amortization as normal from the scenario print button).
Once you are satisfied with the newly calculated skip schedule, click the Accept Amortization As-Is and Continue button. In ALMSys, finish the new deal as you would normally do. In Quotes, DO NOT USE THE CALCULATE BUTTON as it will erase your skips.
How Skips Are Handled
For leases, a skip will not produce a statement. It will be billed and show up on the payment history screen as billed. For loans, skips will not trigger a statement.
Leases with skip schedules may NOT be extended. You will need to pay off the lease and add a new deal.
Lease AMPTax Changes
Changing the taxes or additional monthly payments is allowed. Only those lines which do are not skips will be affected. Tax rate changes will work just fine.
Deferring payments will work, but be warned that it will push your remaining skip schedule back one period. This may not be what you desire.
Funding adjustments are not allowed for deals with skip schedules. Since this screen is rarely used, this should not be a problem.
Loan Interest Rate Changes
Loan interest rate changes are not allowed for deals with skip schedules. You will need to terminate the loan and add a new deal for the new rate.
One-time fees (for leases) will work, but the fee will be billed on the next non-skipped period.