Overview

Leases can include advance payments, extra costs, residual payments, etc.

Since leases are ussually tailored to meet the lessee's needs, many different setups are possible.

Adding lease events

InterestThing lets you set up a lease any way you like: all you need to do is enter each of a lease's components as events that can either be outflows, inflows or unknowns.

The lease amount itself is entered as an Outflow event, which is also the case for costs such as points, fees, etc.

Regular lease payments are set up as Unknown events, with a factor of 1.

Advance payments are added as an Unknown event that occurs on the lease date. Set the factor to the number of advance payments.

Contact payments are added as Inflow events with their respective amounts.

Step up and step down payments are added as either Unknown or Inflow events.

For example, if you want to set up a three payment step up series of 25%, 50% and 75% of a normal payment, you would add an Unknown event with a monthly series that starts with a factor of 0.25 and which changes by a factor of 0.25.

Please note that we wrote "by a factor of 0.25" and not "by a percentage of 25 %": the first will result in a series of 0.25, 0.50 and 0.75 times a normal payment, whereas the latter results in a series of 0.25, 0.3125 (0,25 + 25 %) and 0.3900625 (0.3125 + 25 %) times a normal payment.

Residual payments are added as inflows with a fixed amount.

Use the Amortization schedule to check that what's generated is what you have in mind!

Example

Select the Lease setup example in the Help > Examples menu, to see how we would set up a lease with advance, step up, regular, step down and residual payments.

Back to Examples