Repayment modes constructor allows defining rules that regulate how the funds transferred by the customer are allocated among their payables. In simple terms, it is an ordered list of steps applied to the payment.
There are two types of steps:
Repayment Steps: Funds are used to cover a specific payable
Recalculation Steps: The rest of the payables are recalculated and allocated among the installments.
Default Modes
There are three repayment modes that are by default available for any credit product.
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Initial Payment Mode
This mode is available by default and has one step: all the funds are used to pay the initial payment.
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Pay-off Mode: This mode is available by default only available to pay off the principal and all the interest and fees as of the current date and used for this purpose.
Other Modes
All other modes depend on the company, their policies and procedures. For each mode, it is possible to define:
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three Default Repayment Modes but it is also possible to add some custom ones and define their settings for each credit product.
Adding a Custom Repayment Mode
To add a custom repayment mode to a credit product:
Go to the Settings → Loan Settings → Credit products and click the pencil icon by the credit product name
In the emerged window, open the “Repayment modes” tab and click the “Add repayment mode” button
Name and Descriptions
The mode name and description are displayed when selecting how the payment shall be allocated. It is important that other users and customers can understand what this mode is dedicated for
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Availability
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The mode availability defines if this mode can be available for
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Customers and/or
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Back-Office.
This means that when manually initiating a payment, they will see this mode in the selector.
Max payment amount
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Define the maximum amount of the transfer that can be performed if this repayment mode has been selected.
Available options are:
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- '
No limit
' (by default) - '
Outstanding principal
' - '
Sum of postponed fees
' - '
Sum of special fees
' - '
Payoff amount
' Max payment amount: For some modes it is important to define a repayment limit. This way you can ensure that there are no left-over funds after all the steps of the mode have been performed.
Steps: Ordered list of repayment and recalculation steps.
The user can easily add steps from the dropdown at the bottom of the following form. The logic of steps performance and types of steps are described further in the document.
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Adding Steps
As it has been mentioned before, each repayment mode is a set of steps performed with the transferred amount.
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The step are allocated in groups, subject to the installment they are related to:
We’ve strived to make the step names rather simple and easy to understand, however, shoudl there be a doubt, select the step in the drop-down and its detailed description will appera below it.
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If this is the step you need, click the “Add step” button, and the step will be added to the list
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When there is more than one step in the list, you can use the up and down arrows to move the steps around the list.
The logic of the Mode Steps Performance
The system performs or attempts to perform repayment and recalculation steps in the order they are placed on the list. We can virtually divide the steps into:
Repayment Steps
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: related directly to the usage of the transferred payment
Recalculation Steps: related to recaculation of the loan fees, interest and principal in consideration of the previous repayment steps.
The system performs repayment steps in the order of their placement on the list until whole payment amount is used up, i.e.
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.
If the amount is not enough to cover the step in full, it covers it in part and moves on to perform the remaining recalculation steps in the corresponding order. It does not perform any other repayment steps.
If the amount is enough to cover the steps in full, the system covers the step, and
If the next step is a repayment step, the system tries to perform it (as in 1)
If the next step is a recalculation step, the system performs it and moves on to the next step
The system continues, until the repayment amount is used up and all recalculation steps are performed.
Finalize the Repayment
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Repayment Steps
To understand the repayment steps, it’s important to be aware of the following terms:
Repayment Date: Date on which the transaction has been made (via a payment system) or date with which the transaction has been registered in the system manually.
Due Date: The day on which the installment has to be paid-off in compliance with the payment schedule for the loan.
The table is divided into several sections:
– Repayment Steps –
Name: Pay debts (PastDueDebtStep)
Description: Cover the fees, interests and principle due on the missed installments as of the Repayment Date.
--- Current Installment Payments ---
Name: Pay current installment fees (EarlyPayCurrentDebtStep)
Description: Cover the fees and interests payable for the current installment and accrued before the Repayment Date. Applied if the Repayment Date precede Due Date of the installment.
Name: Pay current installment principal (RemainingCurrentPrincipalStep)
Description: Cover the principal scheduled for the current installment (as should be payable on the due date). Applied if the Repayment Date precedes Due Date of the installment.
Name: Pay current installment due debt
Description: Cover the fees and principle payable for the installment. Applied if the Repayment Date is the same as the Due Date for the installment.
--- Future Payments ---
Name: Pay future installments from the first (FutureDebtStep)
Description: Cover fees, interest and principal installment by installment from the nearest to the next one.
Name: Pay future installments from the last (FutureDebtReversedStep)
Description: Cover fees, interest and principal installment by installment from the the last to the one before last, etc.
Name: Pay leftover principal (OverpaymentStep)
Description: Cover the principal payment leftover on the date of the Repayment
--- Side Fees ---
Name: Pay special fees (SpecialFeesStep)
Description: Cover special fees payable on the Repayment date (in the payment priority order)
Name: Pay postponed fees (PostponedFeesStep)
Description: Cover postponed fees payable on the Repayment date (in the payment priority order)
Name: Pay Leftover Fees (PayShiftedStep)
Description: Cover the fees shifted from the previous installments before the Repayment Date.
-- Recalculation Steps --
Name: Recalculate current installment (CurrentRecalculateStep)
Description: Recalculate fees and interest for the current installment. Recommended for use after the Current Installment Payments steps.
Name: Balance current installment
Description: Recalculate fees and interest for the current installment and move them to postponed fees if their leftover amount is less than the equal payment. Recommended for use after the Current Installment Payments steps.
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Mode Creation
Once you’ve defined all the steps and settings, click the OK button at the bottom.
When the Credit Product page emerges, click the OK button there as well to save the changes.