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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.
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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 Availability)
Payment Schedule
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Define how the payments are calculated.
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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.
As long as an installment is the “Late grace days” past-due, no past-due fees are accrued. If the debt is not repaid within the “Late grace days” period - the following day the system applies the whole past due fees for all days past due. Set the Late Grace Days value to 0 to disable this feature.
Customizable Equal Payments
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When customizable equal payments are chosen, you can allow your employees (Back-Office Users) and/or Customers to specify the basic installment amount.
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Every “repayment period” the “equal payment” is charged from the Customer. The rest of the amount to be repaid is charged with the last installment.
If enabled, Back-Office Users and/or Customers change the equal amount. The payments will be recalculated correspondingly.
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Interest Settings
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You can go on to define the interest that will be applied to all loans with this Credit Product.
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Should the installment be paid off earlier, the interest may vary (subject to other settings of the Credit Product).
If the loan term is prolonged - the interest will be applied to the new loan period.
If the loan is paid off early - the interest may vary (subject to other settings of the Credit Product).
Variable Interest
Check the “Use variable interest rate” box to make the interest value variable.
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The value defined in the “Interest” field (“4” in the example above) is the default interest assigned to the Loans of this Credit Product.
Min interest rate (“0” in the example above) and Max interest rate (“15” in the example above) are the limits to the interest that can be defined by the authorized users (“Who can edit the fee”)
Calculation Basis
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If the Interest is calculated as a rate or percent, it can be calculated based on:
Remaining principal: Decreased when part of the principal is paid off. Does not depend on the fees.
Loan amount: stays the same throughout the loan term.
Installment balance: The amount due for the specific installment, including all the fees accrued during this installment.
Loan Phase
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Define if the interest shall be included in the Grace period if the Grace Period is defined for the loan.
Please note that the Grace period is not related to the “Grace days”. The Grace period is one or several installment(s) that can take place at the start of the Loan Term or before the Loan Term - for which dedicated fee and interest rules can be defined.
Loan Offer Constraints
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Define the minimum and maximum limits for the loan amount and term. The values below or above the limits will be declined by the system for this Loan of the Credit Product.
Fees
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Define the fees that must or can be assigned to the loans of the Credit Product.
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When the fee is selected, you will see a tab with adjustable fee values. The list of values and settings is limited according to the most common industry standards. However, should you need more adjustments, please address TurnKey Lender team.
2. Fees
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Add fee: Click to add any fees associated with the loan.
Manage repayment priority
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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:
Duration of the period as a number of Days, Weeks, Months, or Years. Examples: 10 days, 1 Month, 2 weeks
Number of repayments during a calendar period. Examples: 3 times per month, 2 times per year
Number of repayments during the whole loan term. Examples: 1 time (so-called 'Pay Day' loan), 4 times per Loan Term, etc.
In the Light Mode, the payment schedule can be automatically created subject to the chosen Loan type are built-in templates that allow creating typical credit products in a few clicks:
Payday
One-installment scheduleAnnuity (installment based)
Installment interest value doesn't depend on a number of days in an installment.Annuity (daily based)
Interest is calculated and accrued daily, so the result interest value for an installment depends on a number of days in this installment.
To compare the last two loan types, you can look into two schedule examples for the same loan amount, loan term and interest rate.
Annuity (installment based):
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Annuity (daily based):
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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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In the Advanced Mode, any repayment period is allowed:
any number of days, weeks, month or years
several times per month, a year or even a loan term.
Examples: 2 months, 3 weeks, 18 days, 5 times per month, 2 times per week, 8 times per year, 3 times per Loan Term, etc.
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The principal can be accrued in every installment or once in the last or in the first installment. The same, interest can be adjusted to the business needs.
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:
Percent (from the remaining principal)
15% per year, 10% per month, 0.5% per day
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Amount
$100 per month, $20 per week, $1 per day
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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.
In the Light Mode, there are two options:
'No Interest' means there are no payments during the grace period.
'Interest Only' means the borrower pays off only the interest and, if applicable, administration fee during the grace period.
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Grace period type = 'Interest Only'
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Grace period type = 'No Interest'
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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.
There are three ways how a fee can be included into the repayment schedule:
it can be added to the initial schedule (origination fee, administration fee, etc.)
added on an event (past due fees, NSF, repayment fee, disbursement fee, etc)
added to active loan manually by a manager at any moment (toll fee, parking fee, etc.)
Each fee can have its own rate and calculation bases, it also can be accrued at the beginning or end of the repayment period (installment).
A fee accruing period can differ from the repayment period.
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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:
APR
XIRR
IRR
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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.
There are two options on how to close the current installment:
pay all the scheduled principal, interest and feed,
pay only the scheduled principal plus the interest and all fees accrued by the repayment day.
In the case of overpayment, there are more options.
The schedule for the further installments is not recalculated.
Overpayment is applied to close installments one by one in the specified processing orderForward from the next installment to the last installment
Backward from the last installment
Overpayment is applied to reduce the remaining principal.
The schedule for the further installments is recalculated with the new remaining principal and the general rules for this credit product.
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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Click the “Manage repayment priority” button below the Fees section to define the order in which the payment will be allocated among the accrued amounts.
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The “Priority” window will emerge. Here you will see the list of all accrued amounts (Principal, Interest, and any of the Fees defined).
When a payment is received, they will be paid in this order. This is particularly important for early and partial payments.