Flexible repayment plan

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Flexible repayment plan

Overview

Lenders can use this feature to set up flexible repayment schedules for borrowers.

Following are some scenarios of flexible repayment schedules:

  • A repayment plan can be set up without specifying the payment amount.
  • A repayment plan can be set up on random dates, such as March 3rd, April 8th, May 10th, and so on.
  • A repayment plan can be set up with 'interest-free payments' periods.

Defining Flexible Repayment Plan

Prerequisites

To define a flexible repayment schedule, the following prerequisite must be met:

  • The value of Repayment Procedure field is selected as Flexible.

Steps

To define a flexible repayment plan:

  1. Log in to your Salesforce account.
  2. On the CL Contract page, scroll to the Flexible Repayment Plan section.
  3. Click Add to set up the repayment plan.
  4. Specify the required field values for the plan, as described in the Field reference for defining flexible repayment plan table.
  5. Click Validate to validate the details you entered.
  6. Click Save.The repayment plan appears under Schedules > Repayment Plan.

Example of Flexible Repayment Plan

The following image displays a flexible repayment plan.

The following image displays the detailed repayment schedule as per the defined flexible repayment plan.

Calculation of the Repayment Amounts

  • Repayment amount for the 1st and 2nd terms = equated monthly installment (EMI).
  • Repayment amount for the 3rd, 4th, and 5th terms= only interest component of the EMI, so the principal component is 0.
  • Repayment amount for the 6th term = only principal component of the EMI, so the interest component is 0.
  • Repayment amount for the 7th and 8th terms is fixed to 100.
  • The repayment amounts for the remaining terms = EMI because nothing have been defined for the last 2 terms.

Fields Reference for Defining Flexible Repayment Plan

Field NameDescription
SequenceThe sequence number of the repayment plan schedule.
Payment Type

This is the parameter to compute the repayment amount.

The following are the options for the payment types:

  • Equal Monthly Installments

  • Equated Principal

  • Interest Only

  • Principal Only

Note:

  • If Repayment Procedure = Equal Monthly Installments, then a flexible repayment schedule with Payment Type=Equated Principal cannot be created.

  • If Repayment Procedure = Equated Principal, then a flexible repayment schedule with Payment Type= Equal Monthly Installments cannot be created.

Payment Amount

The installment amount that the borrower must pay. If you do not specify any value here then system computes the value based on the option selected in the Payment Type field.

For example:

If Payment Type = Interest Only

then, Repayment Amount = the interest part of the EMI that is computed as per the contract terms.

Number of PaymentsThe number of payments for the specified payment amount.
Effective DateThe date from which the repayment schedule is in affect. This is also the Contract Start Date.
Payment Start Date

The date from which the defined payments must start. For the first schedule entry, this must be the contract's payment start date.

Note:

This must be the same as the payment start date of the contract, for the first row of the repayment plan.

Advance Interest

Select this check box if you want the Interest Only Payment Type to be calculated and charged in advance at the time of disbursal.

Note:

Advance Interest for the Interest Only Payment Type can be applied only for the first initial schedules of the repayment plan, and not after. For more information, see Partial Interest in Advance

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