Setting up rebate on a protect fee

Lenders can offer rebate to borrowers and investors on the fee charged for availing the Protect provision on their loans and investments, respectively. 

For information on setting up the Protect fee, Refer to sections Fee Setup and Defining the Protect Fee Split in the CL Loan Administration Guide.

Borrower rebate - It  is calculated on a prorated basis. The lender can decide whether borrower must be rebated in all scenarios or only if no waiver is claimed during the early or regular closure of a loan.

Investor rebate - If existing contract is closed, the investor gets the Protect Fee Splits rebate. Rebate to investor is present in ‘Other Loan Transactions’ list with the ‘Transaction Type’ as ‘Protect Rebate’.

Rebate calculation: Protect fee is computed as the percentage of the loan amount (User selected value + Platform Fee). The amount is rounded to the nearest number based on the rounding method defined in the org parameters.

In case a borrower pre-pay's a loan then, the system should calculate the rebate for the borrowers as per the following formula

y = (p × s × (s + 1)) ÷ (t × ( t + 1))where:y = the amount of the rebate of the consideration paid for the repayment waiver p = is the amount of the consideration paid for the repayment waiver s = is the number of whole months in the unexpired portion of the period for which the repayment waiver appliedt = is the number of whole months for which the repayment waiver was agreed to be provided.

The following are the three loan scenarios where a rebate may be extended to an investor. In each of these, the loan is closed.

• Refinance – The previous loan got closed
• Early Closure
• Write Off