Schedule Balance Delinquency Basis

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Schedule Balance Delinquency Basis

Overview

With the Schedule Balance delinquency basis, whenever a borrower is making an extra payment the excess amount goes toward the Excess field and satisfies the fee, interest, and principal remaining if the Payment Application Mode is Current Dues. Here, it is ensured that the loan balance on a particular date is less than or equal to the closing balance of the current schedule to avoid any delinquency on the contract. This is achieved by creating a bill that is required to match the closing balance of the current schedule.

For example, the EMI is $500 and the borrower has made a payment of $600. With the payment application mode as Current Dues, the $100 gets deposited to the Excess field. To utilize this excess amount of $100 and to avoid the contract from turning delinquent, the next bill is generated for $400.

Note:

  • The Schedule Balance delinquency basis works only for IPT enabled contracts.

  • The Payment Application Mode has to be either Deposit or Current Dues.

  • When the Payment Application Mode is Deposit, the excess amount gets deposited to the deposit account rather than satisfying the fee, the interest, and the principal remaining.

Configuration

  1. While creating a lending product, select the Payment Application Mode as Current Dues or Deposit.

  2. While creating a contract for the same product, select the Delinquency Basis as Schedule Balance.

Calculation of Fees in Schedule Balance

This section describes the calculation of fees on a contract for various conditions when the Payment Application Mode is Current Dues.

Include in DuesInclude in SchedulesAdd Fee to Bill AmountFee CapitalizationResult (Current System Date is March 1, 2013)
TrueTrueTrue

On April 1, 2013

  • Due amount in schedules includes the fee amount.
  • Bill is created according to the schedules.
  • The fee is adjusted with the Fee capitalized not the Fee remaining.
TrueFalseFalse

On April 1, 2013

  • Due fee field is zero in amortization schedules as include in schedules is false.
  • The fee is included in the bills as include in dues is true.
True TrueFalse

On April 1, 2013

  • Due amount in schedules includes the fee amount.
  • Bill is created according to the schedules.
TrueTrue

On May 1, 2013 (On April 1, 2013, the bill is not paid)

  • The second bill includes the late charge as include in dues is true and add fee to bill amount is true. 
TrueFalse

On May 1, 2013 (On April 1, 2013, the bill is not paid)

  • The second bill includes the late charge as include in dues is true. 
FalseFalse

On May 1, 2013 (On April 1, 2013, the bill is not paid)

  • The second bill does not include the late charge as include in dues is false and add fee to bill amount is false. 

Calculation of the Bill Amount

This section discusses the calculation of the bill amount when a borrower makes an excess payment.

Prerequisites

The following are the prerequisites to calculate the bill amount:

  • A lending product is created with Payment Application Mode as Current Dues.

  • The contract is approved and the fund is disbursed.

About this Scenario

For better understanding, the concept is being explained with the help of the following example and the set of instructions on how to go about it.

  • A contract is created, approved and the fund is disbursed with the following terms and conditions:

    System Date3/1/2013

    Payment Application ModeCurrent Dues
    Loan Amount$10,000
    Interest Rate10
    Delinquency BasisSchedule Balance
    Is Interest PostingYes
    Interest Posting FrequencyMonthly
    Term10

Steps

Perform the following steps to calculate the bill amount:

  1. Log in to your Salesforce account.

  2. Click the App Launcher.

  3. Search for CL Loan, and then click it.

  4. On the CL Contracts tab, select the required CL Contract ID.

    The following image highlights the loan details on disbursal:

  5. Click Repayment Schedule.

    The amortization schedule is generated as depicted in the following image:

  6. Go to Servicing Configuration > SOD/EOD Process, and update the Move System Date to April 1, 2013. 

  7. On the  CL Contracts tab, select the required CL Contract ID and go to Transactions > Bill(s). A bill of amount $1,046.40 is generated, and interest of $83.33 is posted as highlighted in the following image:

  8. Go to Payment(s) > New Loan Payment Transaction and make a payment of $1,500. 

    After the payment, the New Loan Balance = Loan Balance - Due Principal - Extra Payment Made = $10,000 - $963.07 - $(1,500 - 1,046.40) = $8,583.33.

  9. Go to Servicing Configuration > SOD/EOD Process, and update the Move System Date to May 1, 2013.

  10. On the  CL Contracts tab, select the required CL Contract ID and go to Transactions > Bill(s). A bill of amount 589.02 is generated and interest of $71.53 is posted as highlighted in the following image:

  11. Go to Payment(s) > New Loan Payment Transaction and repay the bill amount.

    After the payment, the New Loan Balance = Loan Balance - Due Principal  = $9,036.93 - $971.09 = $8,065.84.

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