In RTO Pro you can set Lease agreements to be handled like Federal Leases in Store Setup under the contracts tab.
A normal lease in RTO Pro is the same as a normal RTO agreement except there is no discount for early payoff, this is something you may give to a good customer where you are giving them a cheaper rate up front instead of offering an early payoff discount.
If you set your leases to be handled like Federal Leases below is how it works in RTO Pro.
A Federal Lease is a lease contract with a minimum of 5 months with a balloon payment at the end of the regular term. To enable this feature check the "Handle Leases like Federal Lease Law" option in the Contracts tab of Store Setup (Setup Menu Option 1). All leases loaded after you check this box will be handled like a Federal Lease.
The early payoff for a Federal Lease is calculated as follows: (Total balance – balloon) x .25 + balloon
The default balloon amount is calculated as follows:
If number of months on contract is smaller than 13 the balloon is 2 months payments
If number of months on contract is smaller than 13 to 18 the balloon is 3 months payments
If number of months on contract is greater than 18 the balloon is 4 months payments
If you load a 18 month agreement at 25.00 per month there would be a 3 month balloon so the total contract amount = 525.00 (25 x 18 regular payments plus 1 balloon of 75)
If the customer were to pay 4 months then want to payoff the payoff would be calculated as follows:
525-100 = 425.00 balance.
425 - 75 = 350 (balance - balloon)
350 x .25 = 87.50 + 75.00 = 162.50 payoff
This payoff calculation for Federal Lease was setup according to a customers requested specs we could setup payoff calculation differently upon request. Before you use a Federal Lease agreement in RTO Pro or any agreement type in RTO Pro always make sure it is legal in your state.