How to Enable Payment Holiday for Your Users
Introduction
What is a payment holiday?
Payment holiday is an operation that changes the loan payment schedule, so that the next payment is shifted to a later date (and all the remaining payments are shifted accordingly).
For a borrower, it’s better to use a payment holiday than to miss a scheduled payment, as in this case, there is no no past due fee applied (regular interest applies).
If enabled, payment holiday can be requested by a borrower if, for whatever reason, they cannot perform the payment in time. In this case it must be approved by a Back-Office employee. If the payment holiday is initiated by a Back-Office employee it is applied immediately.
Affects of an Approved Payment Holiday
When a payment holiday is applied, it affects:
Payment schedule: Due Dates of the First Open Installment and all following installment are shifted in compliance with the payment holiday term.
Interest: Accrued interest is applied to the First Open Installment as stipulated by the interest rate defined for the loan. The interest is calculated for the period between the old and new Due Dates of the First Open Installment.
Outstanding Interest is recalculated in compliance with the new loan durationBalance log: A new record is added to the Balance Log with the amount of interest applied and Description: “payment holiday Applied”.
Loan Statuses: All the statuses are updated in compliance with the new Due Dates.
loan status;
The installment statuses.
Enable Payment Holiday for a Product
Support of a payment holiday is defined separately for each Credit Product in the Credit Product settings in the “Use payment holiday” tab.
To enable the payment holiday, simply activate the trigger.
Payment Holiday Settings
Once the trigger has been enabled, you can define basic settings of the payment holiday allowed for this product. The settings are:
Buffer time period
Buffered time period is minimal time before the First Open Due Date when payment holiday can still be applied. For example, if it set to zero (0), the payment holiday can be applied directly on the Due Date. If it set to ten (10), an attempt to request/apply the payment holiday when there less then 10 days left before the Due Date will be rejected.
By default the buffered time period is set to one (1) day.
It cannot be less then zero (0) or more than 99 (ninety-nine) days.
Max shifting term
Max shifting term is a maximum duration of the payment holiday, i.e. maximal number of day by which the First Open and following Due Dates can be shifted. Attempt to request/apply a longer payment holiday will be rejected.
By default the max shifting term is set to ten (10) days.
It cannot be more than 99 (ninety-nine) days.
Maximum allowed payment holidays for loan
Maximum allowed payment holidays for loan is a number of time a payment holiday can be approved for the same loan. If the number is set to one (1), the second attempt to request/apply a payment holiday will be rejected.
By default the buffered time period is set to five (5) times.
It cannot be less then 1 (one) - otherwise, payment holiday switcher shall be disabled. The maximum number of times is not limited.