Introduction
Each lender is ready to provide their Potential Customers with Loans under specific conditions. Such conditions may depend on the business domain, country legislation, and of course, policies and business strategy of the Lender.
TurnKey Lender’s Credit Products functionality allows the Lender’s System Administrator to set up credit products of different complexity.
For example:
You can offer the clients a credit product with a 12-day grace period, 12% annual interest and an additional $35 fee once a repayment period.
You can also define the repayment priority (e.g. if the customer has only paid part of the payment, you will charge for the interest first then the principal, and any leftover amount will be used to pay the fees).
You can also specify how the overpayments shall be used (e.g. to pay off the future principle).
You can strictly define or allow your Customers to select the repayment period (installment) and the loan term.
You can specify other settings, as described in this article.
Understanding Light and Advanced Mode
Light Mode is Ideal for creating credit products using best practices and common industry settings, ensuring simplicity and efficiency.
Advanced Mode: Offers extensive flexibility to design a wide range of credit products without predefined templates. Due to its extensive flexibility, it's recommended that only TurnKey Lender support and implementation teams use this mode, as improper settings can significantly disrupt the system.
The following articles will describe work in the Basic Mode only
Basic Actions with Credit Products
Access Credit Product Settings
Users with “System administration” permission can modify existing and create new credit products in the Settings → Loan Setting → Credit Products page.
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To add a Credit Product, click the “Add credit product” button at the top of the page.
To edit a Credit Product, click the pencil icon in the corresponding row of the Credit Products table
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You can also duplicate a Credit Product (copy icon above) and then edit it to create a new, slightly different Credit Product based on the existing one.
Switching Between Modes
To switch from Light Mode to Advanced Mode, scroll to the bottom of the screen and click the “Use advanced mode” button.
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Available Settings
The list of settings may be outdated. Please check the functionality for the up-to-date list.
The following settings are available for a Credit Product
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The main settings of the credit product are defined in the “Schedule building” tab.
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General Information
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Enter basic details of the credit product.
Name is the only mandatory field in the section.
Name: Enter the name of the credit product.
Description: Provide a description of the credit product to give more context about its purpose or features.
Visible to customer: Check this box if you want the credit product to be visible to customers. If disabled, you can use them for promotional purposes (see Create Credit Products available with a Promocode)
Payment Schedule
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Define how the payments are calculated. The following settings can be defined:
Loan Type
The Loan Type will affect the general approach used for the payment calculation. The available types include:
Annuity (installment based): Equal payments are made in each installment.
Annuity (daily based): Equal payments are made in each installment with daily interest calculations.
Payday loan: Features decreasing interest and a fixed principal amount.
Classic: Payments decrease over time due to the reducing interest.
Bullet: Principal is paid in full at the last installment.
Flat: Interest remains constant throughout the loan term.
Leasing: Generates a lease schedule with equal installment payments.
Rule of 78: Front-loads interest payments, with more interest paid upfront and less towards the end of the term.
Repayment period
Choose the frequency of repayments. The installment schedule will be built based on this repayment period.
Daily - repayment once a day.
Weekly - repayment once a week.
Bi-weekly - repayment once in two weeks.
Semi-Monthly - repayment twice a month.
Monthly - repayment once a month.
Bi-monthly - repayment once in two months.
Late grace days
Specify the number of grace days allowed for late payments. During this period, no past-due fees are accrued when an overdue payment takes place. If the debt is not repaid within the Late Grace Period, the following day the system applies the whole past due fees for all days in the Late Grace Period.
Set the Late Grace Days value to 0 to disable this feature.
Customizable Equal Payments
Enable customizable equal payments: Check this box to allow equal payment customization.
Use variable interest rate: Check this box if the loan has a variable interest rate.
Interest Settings
Interest: Set the interest rate as a percentage and the period (e.g., per Month).
Calculation basis: Select the basis for interest calculation (e.g., Remaining principal).
Loan phase: Define the phases of the loan (e.g., Grace period, Main period).
Loan Offer Constraints
Min amount: Specify the minimum loan amount.
Max amount: Specify the maximum loan amount.
Min term: Set the minimum loan term.
Max term: Set the maximum loan term.
Fees
Add fee: Click to add any fees associated with the loan.
Manage repayment priority: Manage the priority of repayments for various fees and principal amounts.
This detailed guide covers all the settings available in the "Add Credit Product" interface, providing users with the ability to fully customize their credit products according to their specific requirements.
Basic Settings
Basic settings are the same for both modes and include:
Name used in the UI to identify this Product (Name)
States or territories where the Credit Product is available (State management) - applicable only to the US edition and only if the State management is on.
Whether the Credit Product can be directly selected by the customer (Visible to customers): If disabled, the product can be selected from Back-Office or hidden behind a promocode.
Schedule building
A bunch of settings related to the main schedule-building rules:
Payment schedule
Payment schedule in the advanced mode
In the advanced mode, you can define due dates on the collection of the principal, accrued interest, and commissions owed by a borrower.
There are three approaches to Repayment Periods:
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In the Advanced Mode, lenders can create any schedule building rules as needed. It is easy to create Classic, Bullet, Flat Interest, and any other known schedule type, or a completely specific one.
Repayment Period
In the Light Mode, there are four pre-defined options.
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Below there is an example where the principal is accrued in the last installment, the interest - in the first installment, a fee - in every installment.
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Interest Calculation
Interest Rate
The interest rate can be specified in two ways:
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An interest rate base doesn't depend on the repayment periods, so the accrued interest value per installment depends on both these factors.
Example: if the repayment period = 1 month, then the interest can be calculated with bases 20% per year, $10 per week, $3 per day, etc.
Interest distribution
This feature allows creating schedules where interest depends on a number of days in the installment.
Fixed for Period - Interest Amount is calculated for a period (installment) and then divided into intervals within this installment.
This method is used to build typical Annuity and Classic schedules.Fixed for Interval - Interest Amount is calculated for each interval (day) within an installment. The total interest amount for an installment is a sum of all interval values.
This method can be used to build Annuity (daily based) schedule, for example.
Grace Period
A grace period can be specified for a credit product in a number of installments.
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In the Advanced Mode, it is possible to manage turn on/off accruing Interest, Fees and even the Principal during the grace period in any desired combination.
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Fee management
A credit product may contain an unlimited number of fees, each with its own periodicity, calculation and accrual rules.
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Several similar fees can be used simultaneously: such as more than one Origination Fee and so on.
Late Grace Days
During this period, no past due fees is accrued if an overdue installment takes place.
If the debt is not repaid till the Late Grace Period, on the following day the system applies past due fees for all days in Late Grace Period in whole.
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Effective interest rate
Effective interest rate is calculated for every loan according to one of the available methods:
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For every credit product, the minimal and maximal possible effective rate is auto-calculated to prevent exceeding the legal limits.
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Manage Accrual Priority
For every credit product independently, it is possible to change the accrual priority. It determines the order in which the principal, interest, and fees should be accrued if their accrual dates fall on one day.
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Manage Repayment Priority
For every credit product independently, it is possible to change the repayment priority. It means that a repayment transaction amount is applied to cover accrued principal, interest and all fees in the specified order.
This functionality is available both for Light and Advanced modes.
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Cash Flow
A Back-Office manager can see a detailed history of all accrued and repaid values for every installment.
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Payment Applying Settings
All received repayment transactions are applied immediately.
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Using various combinations of these options lets cover the best part of true-to-life business needs.
Pay Off
A borrower is allowed to close a loan early in case they pay the Pay Off amount. This amount is visible both on the Back-Office and Front-Office and depends on the current payment applying settings.
Pay Off transaction has a special type and can be applied on the current day only by a borrower or a Back-office manager.
Back-Office Front-Office
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Write Off
A loan can be written off manually (any moment, any Outstanding Balance) or automatically (Outstanding Balance < Write-off tolerance value, in Advanced mode only)
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