Generate Backdated and Future Dated Payoff Quotes for Simple Loans

Overview

With the Oxygen release, the CL Loan system has the ability to generate backdated and future dated pay off quotes.

Backdated Payoff Quote

A backdated payoff quote can be generated on a date that is in the past and is greater than the last LAD. Such a quote is calculated for a period starting from after the last LAD to the payoff quote date.

When a backdated payoff quote is calculated, the system excludes all the fees whose due date is after the backdated payoff quote generation date, and such fees are waived off when a backdated payoff is made creating a waiver OLT in the system.

You cannot generate a payoff quote for a date that is less than the LAD date.

Future Dated Payoff Quote

The future dated payoff quote can be generated for a date in the future with an option to select if the bills and fees are going to be paid on time. This quote is calculated from the current system date to a specified date in the future that is not more than the maturity date of the loan.

When the Pay Future Dues Timely flag is enabled, all the future payments that fall on a due date that is before the payoff date are considered to be paid on time on their due dates while calculating the payoff quote.
When the Pay Future Dues Timely flag is disabled:
- The principal amount and the charge whose due date is less than the payoff date are considered not paid, and hence the current loan balance and the charge are included in the payoff quote.
- The interest from the current system date to the future payoff date is calculated on the current loan balance, and not on a future dated loan balance, and is included in the payoff quote.

Future Dated Payoff Quote with Interest Rate Schedule

With the Winter’22 release, the Future Dated Payoff Quote also takes into account the change in rate as defined in the Interest Rate Schedule on the loan contract.

To consider the Interest Rate Schedule for a Future Dated Payoff Quote, the Flexible Rate flag should be set to as true either on the Lending Product or the loan Contract.

Example: Future Dated Payoff Quote with Rate Schedule

To consider a rate schedule of a contract or lending product for the future dated payoff quote, the Flexible Rate flag must be set to True.

Let us then do the following:

Create a contract with a simple Lending Product and the following Rate Schedule:
Rate Schedule Start Date Rate Schedule Interest Rate
January 1, 2022 8%
January 5, 2022 16%
Create a Payoff Quote on January 1, 2022, with the Payoff Date as January 10, 2022.
The Current Interest Rate on the contract is 8% as of January 1, 2022, and it is going to change to 16% as per the existing Interest Rate Schedule from January 5, 2022.
The system will accrue the interest as per the following Interest Rate Schedule and hence the Payoff Quote for January 10, 2022, will be calculated as per the following rates:

Date	Interest
January 1, 2022, to January 5, 2022	8%
January 5, 2022, to January 10, 2022	16%

Note:

The rate schedule can be changed or modified during the contract’s tenure, either by rescheduling the contract or by a rate change.

Future Dated Payoff Quote with Flexible Repayment Plan

With the Winter’22 release, the Future Dated Payoff Quote also takes into account the Flexible Repayment Plan within a loan contract.

To consider the Flexible Repayment Plan for the future dated payoff quote, follow the steps:

Create a contract with a Flexible Repayment Plan.
Edit the details as required.
Approve the contract and disburse the loan.
After the disbursal of the loan, create a payoff quote for the future date by enabling the Pay Future Dues Timely flag to view the schedule.

Example: Future Dated Payoff Quote with Flexible Repayment Plan

Create a Lending Product with the following details:

Time Counting Method	Month and Days
Payment Frequency	Monthly
Add Fee Amount to Bill	False
Interest Type	Fixed
Default Interest Rate	5%
Is Interest Posting Enabled	True
Interest Posting Frequency	Billing Frequency
Is Capitalization Enabled	False

Create a contract on March 20, 2013, from the preceding lending product with the following details:
Loan Amount $10,000
Term 10
Add a Flexible Repayment Plan as follows:
Sequence Payment Type Number Of Payments Effective Date (Payment Start Date)
1 Interest Only 2 April 20, 2013
2 Equal Monthly Installments 2 June 20, 2013
Disburse $10,000.
Move the system date to the first billing date, which is April 20, 2013.

Generate a future dated payoff quote for the Payoff Date, July 20, 2013 (Fourth bill date), for both values of the Pay Future Dues Timely flag, True and False.The system calculates the Payoff Quote as follows considering the preceding Flexible Repayment Plan:

Pay Future Dues Timely	Interest Posted	Interest Paid Till Payoff Date	Principal Balance	Total Payoff Amount
False	$166.67 = 4 * (10000 * 5/100 * 30/360)	$0	$10,000	$10,166.67
True	$0 Note: The amount in Interest Posted is paid, so the value is $0.	$161.71	$7,572.94	$7,572.94

Note:

For more details on the preceding calculations, you can click the following to expand the view:

Detailed View

Future Dated Payoff Quote with Prepayment Penalty

With the Winter’22 release, the PayOff Quote also considers the prepayment penalty for the future dated, backdated, and current dated PayOff Quotes.

To consider the prepayment penalty for the future dated, backdated, or current dated PayOff Quotes, the Prepayment Penalty Configuration must be added to the contract or product during the creation.

Note:

To know more on Prepayment Penalty Configuration, see the Contract Management > Apply Fees to a Loan Contract > Apply Prepayment Penalty Fee > Add or Update Prepayment Penalty Details: Configuration and Slabs section of this guide.

Note:

The payoff quote generation considers the due date of the charge payment as the due date of the loan repayment or bill, and not the charge due date that is based on the frequency of charge.For example, when a payment is due on May 1, 2013, as per the repayment schedule, and if there is a charge due on April 15, 2013, then if you generate a payoff quote on April 30, 2013, which is one day before the repayment due date, with Pay Future Dues Timely flag enabled, then the payoff quote includes the charge amount too as the system assumes that the charge would not be paid on the charge due date, but on the repayment due date that is May 1, 2013.
For a backdated or a future-dated payment transaction, if the due date of a charge is greater than that payment date, then it is not considered in the payment.

Future Dated Payoff Quote with Late Charges

With the Winter’22 patch release, the future-dated PayOff Quote also takes into account the Late Charges.

Example: Backdated and Future Dated Payoff Quote

Let us understand how a backdated and a future dated payoff quote generation works with the help of an example.

Create a Loan

Let's create a loan with the following terms and conditions:

Fee Details
Fee Name	Periodic Fee
Accrual Frequency	Month-end
Periodic Fee Amount Type	Per Period Amount
Include in Dues	True
Include in Schedules	True
Lending Product Details
Default Term	10
Payment Frequency	Monthly
Default Interest Rate	10%
Time Counting Method	Month And Days
Contract Details
CL Contract ID	LAI-00000006
Loan Amount	$10,000
Application Date	March 1, 2013
Payment Start Date	April 1, 2013
Periodic Fee Setup
Fee	Periodic Fee
Frequency	Monthly
Amount	$100
Start Date	April 5, 2013

Actions Performed

Now, let us perform the following actions on the dates specified as follows:

Current System Date	Action	Results
March 1, 2013	Approve and disburse the loan.	LAD = March 1, 2013. Repayment Schedule is generated as depicted in the following image.
April 10, 2013		The loan is in Active-Bad Standing as depicted in the following image.
	Generate a Payoff Quote	Pay Future Dues Timely flag is not visible as depicted in the following image.
May 1, 2013	Pay the bill	LAD = May 1, 2013.
May 2, 2013	Generate a backdated payoff quote for a Payoff Date = April 30, 2013	Error is displayed as depicted in the following image because you cannot generate a payoff quote for a date less than the LAD.
May 10, 2013	Generate a backdated payoff quote for a Payoff Date = May 6, 2013, with Pay Future Dues Timely = True/False.	A payoff quote of $8319.89 is generated as depicted in the following image. An OLT of type Payoff Quote Generation is created for May 6, 2013, with transaction date May 10, 2013 as depicted in the following image. The payoff amount includes: Principal Balance of $8,308.35. Interest Remaining = Interest accrued till May 5, which is 2.31 * 5 = $11.55. Total Payoff Amount = $8,308.35 + $11.55 = $8319.9 Note: Here the value of the Pay Future Dues Timely flag has no affect on the payoff quote.
May 15, 2013	Create an adhoc Periodic Fee with past Date = April 10, 2013 as depicted in the following image.	An adhoc charge is created in the system as depicted in the following image.
	Generate a backdated Payoff Quote with Payoff Date = May 11, 2013 with Pay Future Dues Timely = True or False. Note: The value of the Pay Future Dues Timely does not affect the payoff quote for a backdated payoff quote generation.	An OLT is generated in the system. Payoff amount includes: Principal Balance of $8,308.35. Interest Remaining = Interest Accrued till May 10, which is $2.31 * 10 = $23.1. Total Payoff Amount = $8,308.35 + $23.1 = $8319.9 The Adhoc periodic charge is not included in the payoff amount because it's due date (May 31, 2013) is less than payoff date (May 11, 2013) as depicted in the following image. Note: The charge due date is considered as May 31, 2013 by the system.
	Generate a backdated Payoff Quote with Payoff Date = May 8, 2013 with Pay Future Dues Timely = True or False. Note: The value of the Pay Future Dues Timely does not affect the payoff quote for a backdated payoff quote generation.	An OLT is generated in the system. The payoff amount includes: Principal Balance of $8,308.35. Interest Remaining = Interest Accrued till May 8, which is 2.31 * 7 = $16.17. Total Payoff Amount = $8,308.35 + $16.17 = $8324.52 The Adhoc periodic charge is not included in the payoff amount because it's due date (May 31, 2013) is less than payoff date (May 11, 2013) as depicted in the following image. Note: The charge due date is considered as May 31, 2013 by the system.
	Generate a future dated Payoff Quote with Payoff Date = June 1, 2013, Pay Future Dues Timely = False.	An OLT is generated in the system. The payoff amount includes: Principal Balance of $8,308.35. Interest Remaining = Interest Accrued till June 1, which is 2.31 * 30 = $69.23. Unpaid Charges = $100. Total Payoff Amount = $8,308.35 + $69.23 + $100 = $8477.58 as depicted in the following image. Note: Charge is included in the Total Payoff Amount as it is assumed to be not paid on time.
	Generate a future Dated Payoff Quote with Payoff Date = June 1, 2013, Pay Future Dues Timely = True.	An OLT is generated in the system. The payoff amount includes the balance amount after paying all the dues, such as the principal amount, interest, and the charges. Total Payoff Amount = Principal Balance - Due Principal (as per the Repayment Schedule) = $8,308.35 - $809.15 = $7,499.20 as depicted in the following image.