The current article describes a monthly installment’s general structure used in the system. The article also explains priorities according to which amounts are written off when the installment is repaid in full or in part.

Monthly payment including additional interest and fee charges

In the most general case, a current monthly installment can be comprised of the following:

1) Principal amount,

2) Interest,

3) Past due interest charged for an overdue installment,

4) Commission,

5) Late fee.

A monthly installment can comprise all these components in any lending scheme (classic, annuity, payday loan). Thus, in the general case, the current monthly installment includes five summands:

                            (1)

where

Total - total amount of the current installment,

P - principal amount derived from a payment schedule calculated according to one of lending schemes: classic (refer to the article “Classic”), annuity (refer to the article “Annuity”) or payday loan (refer to the article “Payday loan”),

I - interest amount derived from the payment schedule or recalculated according to formula (1) or (4) in the article “Early Payments” if processing of early payments is set in the system,

PDI - past due interest calculated by formulas (6), (7) or (9) described in the article “Overdue Charges”,

AF - commission charged according to lending rules when the payment schedule is generated,

F - late fee charged according to a concluded agreement and calculated by formula (11) described in the article “Overdue Charges”.

Priorities for writing off amounts when payments are received

In case a received payment S covers a total amount of the current installment only in part (S < Total), it is necessary to establish priorities according to which amounts due will be written off. In the system, these priorities are established in the following order (from the highest to the lowest priority):

1) Commission (the highest priority),

2) Late fee,

3) Past due interest,

4) Interest,

5) Principal amount (the lowest priority).

Updating a monthly installment when a partial payment is made

If the total amount of the current installment is repaid in part, amounts of installment components are written off according to the established priority (refer to paragraph 2). Each installment component (refer to formula (1)) is repaid in full or in part, depending on a payment amount received. Each component of the current monthly installment is updated according to the following formula:

New value = Old value – s                                        (2)

where

New value - amount of the installment component after repayment, 

Old value - amount of the installment component before repayment, 

s - partial payment amount used to repay outanding amounts of the current installment according to the priority scheme described in paragraph 2.

Partial repayment inside the grace period

If early payments are made inside a grace period (provided the grace period is set in a credit product), the payment schedule is not recalculated until the end of the grace period, irrespective of whether the Use Early Payments option is set in the credit product settings or not. All early payments firstly cover the interest and commission inside the grace period.

If the grace period embraces several months and a received payment amount exceeds an amount of a scheduled installment, this installment gets closed and a remaining amount covers a next scheduled installment according to the established priority (refer to paragraph 2).

If the grace period includes one installment and during this period the borrower makes payment in an amount exceeding an installment amount, this installment gets closed and the remaining amount is accounted as the early payment (refer to the article “Early payments”) outside the grace period. In this case, if the Use Early Payments option is set, a total overpaid amount is used to cover the principal as in case when the early payment is made on a loan origination date.