How the Last Installment Amount is Calculated on Standard Payment Arrangements

When a standard payment arrangement is set up the system will calculate the last installment amount for you. This amount is calculated in the following manner:

Qualifying balance divided by the regular installment amount or number of installments.

1. If the final installment payment comes out to be less than 25% of the regular installment amount then that difference is added to the previous regular installment making the final installment amount higher than the regular installment amount.
2. Ex.  Qualifying balance is 3397.74 and the installment amount is 277.50.  If you divide 3397.74 by 277.50 you get 12 regular installments of 277.50 and a difference of 69.38. 69.38 is less than 25% of 277.50 so it will be added to the final payment of 277.50 making the final installment payment 345.24.
3. If the final payment comes out to be greater than 25% of the regular installment amount then the system will add an additional installment making the final installment amount less than the regular installment amount.
4. Ex. Qualifying balance is 3397.74 and the installment amount is 277.00.  If you divide 3397.74 by 277.00 you get 12 regular installments of 277.00 and a difference of 73.74. 73.74 is greater than 25% of 277.00 so it is not added to the final payment of 277.00. The system will calculate a 13th installment making the final installment payment 73.74.

 NOTE: If the last payment is NOT an equal part and the remained is less than 50% of the final payment then the last payment could be more than normal.  For example: Debtor owes $105.00 and pays $10.00 per month, in reality the last payment shoudl be $5.00, we will make the last payment amount $15.00

Keywords - Kbase Payment Arrangements Kbase Last Installment Amount Article Payment Arrangements Article Last Installment Amount