As soon as the loan has been disbursed, the customer may start making payments to cover the loan and relevant fees, interest, and other charges. Each time the funds are received from the customer, they shall be allocated between different payables. The way they are allocated depends on the chosen Repayment Mode.
How Repayment
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 company employees. Available options are:
'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.
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.
If the steps is valid, the system tries to cover the amount required for step.
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
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.
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.
Name: Recalculate future installments
Description: Recalculate future installments in consideration of the part paid-off for the future. Recommended for use after the Future Payments steps.