What is Extended Rental?
An extended rental is the period a lease enters after its original maturity date when the lessee continues making rental payments without the lease being formally terminated or early terminated. Once a lease passes its maturity date, it continues on a period-by-period basis, collecting the same instalment amount as the original lease term.
How Extended Rentals Work
When a lease reaches its maturity date and has not been terminated or settled, Vault automatically continues to generate instalments at the original rental amount and frequency. The lease remains active and continues to accrue interest and post instalments as normal until the account is formally closed.
Each instalment posting during the extended rental period will generate an invoice that can be sent to the client to advise them of the upcoming collection amount. It is important to ensure the invoice reflects the correct total before it is sent, as the client will use it to confirm what will be collected.
Recurring Charges in Extended Rentals
Recurring charges (such as service or maintenance fees) added to a lease are set up with a fixed number of charges. These do not automatically extend when a lease enters extended rental — they must be manually updated.
If the number of recurring charges has not been increased to cover the extended rental period:
- The instalment will still be posted and collected correctly for the base rental amount.
- The invoice generated for the extended rental period will reflect the base rental amount only and will not include the recurring charge.
- The Direct Debit created for that instalment will also collect the base rental amount only, not the recurring charge component.
This means the client will be under-charged compared to what they should be paying, and the invoice sent to them will not reflect the full amount due.
What to Check When a Lease Enters Extended Rental
When you identify that a lease has moved into extended rental, check the following:
- Confirm the lease is not due for early termination. If the client intends to return the asset, the lease should be early terminated rather than allowed to continue in extended rental.
- Review recurring charges. Check whether any recurring charges (service fees, maintenance charges, etc.) are set up on the account and confirm that the remaining charge count covers the extended rental period. If not, increase the number of recurring charges accordingly.
- Review the invoice before sending. When the extended rental instalment posts and generates an invoice, check that the invoice amount reflects the correct total — including any recurring charges — before sending it to the client.
- Review the Direct Debit amount. Confirm the Direct Debit that will be collected matches the full amount due, including any recurring charges. If recurring charges have not been extended, the Direct Debit will only collect the base rental amount.
Summary
Item
| Behaviour in Extended Rental
|
Base Rental Instalment | Continues to post automatically at the original amount and frequency |
Invoice | Generated each instalment — reflects base rental only if recurring charges have not been extended |
Recurring Charges | Do not extend automatically — must be manually updated |
Direct Debit | Collects the base rental amount; will not include recurring charges if they have not been extended |