Total Payoff vs Due Amount: Where the Side Note Balance Goes

On a buy-here-pay-here account with a side note, the Due Amount a collector works from and the Total Payoff on a payoff quote are two different figures, and they are supposed to differ. The side note balance is rolled into the Due Amount but is deliberately left out of the payoff total. This article shows what each number contains and where to read the excluded balance.

Questions this answers

• "The payoff letter I printed for a customer with a side note doesn't seem to include that side note balance anywhere. Did the system forget to add it?"
• "The 'amount due' a collector sees for this account is bigger than the payoff quote I pulled for the same customer with a side note. Which one is wrong?"
• Are late fees included in the payoff amount?
• Where do I see the Side Note Bal. on the account?

This article is only about what the Due Amount and the Total Payoff each contain on a buy-here-pay-here account. It is not about how to create a side note, and it is not about payoff letter templates.

The short answer

Neither number is wrong. The payoff total is built from the balances that make up the loan itself plus interest earned to the payoff date. Side note balances are excluded from it by design, so a side note has to be collected separately from a payoff. The Due Amount, by contrast, is what the customer owes you right now across everything, side note included — which is why it can be the larger of the two.

The account summary spells this out on screen: the Side Note Bal. field carries the note "Side Note balance is not included in Payoff amount."

What the Due Amount rolls up

Open the account summary and click into the Due Amount field to expand its breakdown. It adds together, where each is greater than zero:

• Principal
• Interest, and Unpaid Interest if any is carried
• Deferred Tax, on deals set up with deferred tax
• Down Payment still outstanding
• Deferred Payment amounts that have come due
• Late Fee
• Bad Check Fee
• Adjustments
• Side Notes

The bottom line of the breakdown is labelled Total of All Due Amounts. Anything a collector is chasing today is in here.

What the Total Payoff computes

Choose More > Payoff for Specific Date on the account. Set the cutoff date and the screen returns Total Payoff, Total Interest, and on simple-interest loans a daily interest figure, along with the Payoff Template to print or email.

The payoff total is the sum of the account's outstanding balances with certain categories held out, plus interest recalculated up to the payoff date you chose. What is held out:

• Side note balances. Excluded. This is the difference dealers notice most.
• The accrued interest balance on the account. Excluded and then replaced — the quote recalculates interest to your chosen payoff date, so the customer is not charged interest the loan has not earned yet.
• Discounts, deferred and non-deferred tax balances, and amounts due from a lender. Held out because they are either already reflected in the principal figure or are not owed by the customer.

Late fees and bad check fees are not excluded. Any unpaid late fee or bad check fee balance is part of the payoff total, the same as it is part of the Due Amount.

Reading the excluded balance

The account summary lists the balances side by side, so you can see the gap without doing arithmetic:

• Side Note Bal. — the side note balance that the payoff leaves out
• Late/Bad Check Fees — fee balances, which the payoff does include
• Payoff — the payoff figure as of today
• Account Balance — the total contract balance

For a deal whose only complication is a side note, the Due Amount and the payoff quote should differ by roughly that Side Note Bal. figure, after allowing for interest recalculated to the payoff date.

Quoting a customer who wants out

If a customer with a side note asks what it takes to be finished with you, the printed payoff figure alone will not close them out — the side note stays open. Quote the payoff and the Side Note Bal. together, and collect the side note as its own transaction. Check what your own paperwork and your state's rules require you to disclose when quoting a payoff.

When to contact support

Contact support if the difference between the Due Amount and the payoff quote is not explained by the side note balance and interest to the payoff date.