Skip to end of metadata
Go to start of metadata

You are viewing an old version of this page. View the current version.

Compare with Current View Page History

« Previous Version 16 Next »

EL-8688 - Getting issue details... STATUS

Introduction

Understanding Repayment Modes

A repayment mode is a rule that regulates 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.

Basic Modes

Initial Payment Mode: This mode is available by default and has an only step: all the funds are used to pay the initial payment. Maximum amount available for this mode cannot exceed the initial payment.

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:

  • Name and Description of the mode: They 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

  • Availability: Defines if this mode can be available for customers and/or back-office users (company employees) - ADD DROP-DOWN OPTIONS TOPICAL FOR EACH CASE

  • 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.

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.

Repayment Steps Performance Logic

The system performs repayment steps in the order of their placement on the list until whole payment amount is used up, i.e.

  1. If the steps is valid, the system tries to cover the amount required for step.

    1. 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.

    2. If the amount is enough to cover the steps in full, the system covers the step, and

      1. If the next step is a repayment step, the system tries to perform it (as in 1)

      2. If the next step is a recalculation step, the system performs it

The system continues, until the repayment amount is used up and all recalculation steps are performed.

Repayment Steps List

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.

--- Past Debt Payments ---
Name: Pay Debts (PastDueDebtStep)
Description: Cover the fees, interests and principle payable on the Repayment date (in the payment priority order)

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)

--- Current Installment Payments ---

Name: Pay Current Installment Fees (EarlyPayCurrentDebtStep)
Description: Cover the fees and interests payable for the current installment and accured before the Repayment Date. Applied if the Repayment Date preceed Due Date of the installment.

Name: Pay Current Installment Principal (RemainingCurrentPrincipalStep)
Description: Cover the prinicipal scheduled for the current installemnt (as should be payable on the due date). Applied if the Repayment Date preceed Due Date of the installment.

Name: Pay Current Installment Due
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(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

Name: Pay Leftover Fees (PayShiftedStep)
Description: Cover the fees (in the priority order) that have been scheduled before the Repayment Date (regardless of the due date)

RECALCULATION AND BALANCING

CurrentRecalculateStep 

suggested screen name: Recalculate Installment

suggested description: Recalculate fees and interest for the installment

suggested info text:  Apply the step after Current Installment Principal  or Current Installment Full  to recalculate outstanding fees and payments for the installment. Don't add the step to keep the initial payment schedule.


RemainingRecalculateStep 

suggested screen name: Recalculate Loan

suggested description: Recalculate the loan schedule

suggested info text:  Apply the step to recalculate the loan schedule if the repayment amount was used for any early payments. 

Options: 

suggested selector info text: Decide how the payment schedule shall be updated if the total due amount is changed. 

Option 1

Current name: Keep initial value

Suggested name: Reduce number of payments

Suggested hint: Installment amounts stay the same, but their number is reduced to match the new amount. 

Option 2

Current name: Recalculate always

Suggested name: Reduce payments

Suggested hint: Loan payment schedule stays the same

  • Availability  

Hint: If you choose Back – only your staff can log repayments. If you choose Front – borrowers can do it themselves. 

  • Steps hint: Prioritize or remove steps of the repayment mode in a way that reflects the order in which you’d like to cover what is owed to you including all the fees, interest, and principal of the loan.  

  • Cover the overdue payments missed in the past starting with the fees. 

  • Current principal early payment 

Covers the principal debt accrued as of the repayment time in the current installment. 

  • Recalculate current installment 

Recalculates the sum owed within the current installment. This affects the fees and interest to be accrued as they are based on the reduced principal. 

 

  • Remaining recalculate step 

Recalculates all future installments if there has been an overpayment which reduced the principal. 

  • Future debt  

  • Future debt reversed 

Covers upcoming installments starting with the last one without recalculating the schedule. 

  • Payoff  

Standard payoff of the whole loan.  

  • Special fees 

Covers all the accrued special fees in the specified order. 

  • Postponed fees 

Covers all the postponed fees in the specified order.  

  • No labels