The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

The default values are fetched from the lending product. For more information on interest rate, refer to chapter Key Concepts of a CL Contract.

The method used for calculation of interest.

Declining Balance: Declining Balance method is based on the outstanding loan balance. It is the balance of the money that remains in the borrower’s hands as the loan is repaid during the loan term. As the borrower repays installments, the remaining loan balance declines over time. The Interest is then charged only on the loan amount that the borrower still holds.

Flat Rate: Flat Rate Calculation Method is a method in which the Interest is computed on the original amount every month.

Flexible Repayment: Flexible Repayment is a method in which the Interest is calculated on the reduced Principal balance, with the change in Interest rate.

The frequency at which the borrower must repay the loan amount. You can override this value at the contract level.

The start date of the loan repayments. Generally, the payment start date is the contract start date or funding date + one payment period.

The number of days the system waits before charging the penalty on any payment that is over due. If the borrower makes a payment within these days after the payment due date is crossed, late charge is not applied.

In case of Flexible AMZ loans, in addition to the late payment charge, interest is calculated on the delinquent amount, based on the Interest on Arrears (IOA) setup.  For information on interest on arrears, refer to section Interest on Arrears.

Select the Business Hours to apply the business holidays on the contract.

If none is selected, then the contract assumes the Business Hours defined at the product level. If Business Hours are not defined at product level, then the contract assumes the default Business Hours.

Loan details

Loan Details define the general characteristics of the loan product on which a loan contract is based. For example, lenders can view details like loan type, interest rate, and the payment and disbursal dates. Similarly, if the lender refinances or reschedules a loan, or a loan matures, these updates are reflected here.

CL Loan has two types of Interest rates, namely:

• Fixed for the duration of the loan

• Floating that may change during the lifetime of the loan

This field is selected to change the Recurring ACH frequency set up in the contract.

Payment Application Mode are of two types, namely, Future Dues and Current Dues.

These modes provide lenders the flexibility to decide how any excess payment made by the borrower is applied towards the outstanding dues. In both cases, the borrower's outstanding principal amount is reduced by the excess amount.

Future Dues - any amount remaining from [Paid amount - (bill amount - fee component)] is saved as Reserve Amount for Next Due. This amount is used to satisfy the future bills till it is fully consumed. In such a case, the borrower does not have to make a payment against the future bill to the extent that is satisfied by the excess amount. 

Current Dues - any amount beyond the current bill amount is deducted from the outstanding principal amount. However, the borrower’s payment plan remains unchanged. Therefore, in the system, this amount is not added to the Reserve Amount for the Next Due of a CL Contract. 

The default Payment Application Mode is Future Dues. This field is not applicable for Flexible AMZ and LOC loans.

Payment Mode is the means by which a payment or disbursement is made, such as cash, check, Automated Clearing House (ACH). You can set up the payment mode at the following levels:

• Lending product - to apply the mode to all the contracts of that product.

• Contract - to apply to all transactions of the contract, overriding the mode specified up at the product level.

• Transaction - to apply to a specific transaction, overriding the mode specified at the contract level.

There may be scenarios where the system looks for the payment mode at the contract level, for example, in case of investor loan transactions (ILT) created for manually deactivated investment orders. Such ILTs do not have a payment transaction, and hence, a payment mode is associated with them, and the system considers the payment mode specified at the loan contract level to process the ILT.

Contract

A Contract represents the various contractual parameters agreed upon with the borrower at the time of contract creation for repayment of the loan, like, the loan tenure, the repayment schedule, number of interest only periods, and any other payment details applicable for the loan.

A floating interest rate, also known as a variable or adjustable rate, can apply to any type of debt, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest over the life of the loan. In Floating Rate of Interest, the rate of interest varies over the tenure of the loan, however, it moves in tandem with a reference rate which can be periodically reset, and be calibrated using what is called the Margin Rate. For a floating interest rate, Interest Rate = Index Rate + Margin Rate.

You can select the Floating Rate Index and Margin Rate percentages to be applied. When the interest rate changes, the contract needs to specify whether:

• The payment amount will change.

• The payment amount remains the same.

• The Term remains the same in either scenario.

The method used for calculation of interest.

Declining Balance: Declining Balance method is based on the outstanding loan balance. It is the balance of the money that remains in the borrower’s hands as the loan is repaid during the loan term. As the borrower repays installments, the remaining loan balance declines over time. The Interest is then charged only on the loan amount that the borrower still holds.

Flat Rate: Flat Rate Calculation Method is a method in which the Interest is computed on the original amount every month.

Flexible Repayment: Flexible Repayment is a method in which the Interest is calculated on the reduced Principal balance, with the change in Interest rate.

The method of determining number of days in a year. Options are Months and Days, Actual Days.

Pay off amount is calculated by adding:

• Principal remaining

• Interest remaining

• Fees remaining

• Interest accrued

This scenario occurs when a borrower decides to pay off the entire pending loan amount in one payment.

The field is selected if Payoff fee is present in the loan's fee set, and a Payoff charge should be created.

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

The default values are fetched from the lending product. For more information on interest rate, refer to chapter Key Concepts of a CL Contract.

The day of the month on which the payment from the borrower is due. For example, 5. The payment would be due on the 5th of every month in this case.

In CL Loan 2.3007 or later releases, you can specify "31" in this field to set the due date to the last day of the month for loans with monthly payments. The system automatically adjusts the due date as per the number of days in a given month, such as 31st for January and 28th for February.

If you specify the payment due days (that are added to the installment date to derive the payment due date), the system calculates the payment due date as Due Day+ Payment Due Days.

This is used at the time of billing.

For example, if due day is February 28 and payment due days are 5, the payment becomes due on March 5.

The Protect feature insures lenders and investors from borrower defaults. Lenders can collect premiums from the borrower and or the investor for insurance against partial or full default. Premiums may differ for each credit grade, loan amount or term. The Protect feature is setup on lending products with an additional option to configure protect fees for automated processing. To enable this feature, the lending product's configuration needs to be updated or new lending products are configured with protect fees.

The protect fee percent must be set at the time of contract creation. The Protect tab of a contract displays the details of the protect fees and protect claims.

The borrower can opt for a Partial or Full Protect.

Partial: This option insures the borrower against payment default for a partial duration of the loan. For example, a borrower may not be able to make payments for the next six months due to disability and rehabilitation treatment. These six payments are waived off under Partial protect, while the loan remains in Active-Good Standing status. In the CL Loan systems, the LPTs for these payments are created with payment mode as Waived. In addition, a checkbox called Waived on the LPT indicates that the payment is waived under Protect. No returns are paid to the investor for these six months.

Full: A borrower may claim full protect in case of inability to pay at any time in the future. For example, a borrower may suffer permanent disability. In such case, all accrued and future payments are waived and the loan is written off. The investor does not receive any returns except for the management fee for future periods.

There may be a third scenario where a borrower has availed Protect, but not claimed it, and defaulted on the loan. Based on the write off tolerance and other settings on the loan contract, the loan may be written off and the management fee paid back to the investor on pro-rata basis.

Funding

When the lender pays out money under a loan agreement, it is referred to as Funding.

It defines the funding status and distribution of the loan. Lenders can view details related to the approved and the funded amount along with any applicable fees. For example, lenders can view how applicable fees are accounted in the funding and disbursals. If the loan is refinanced from other loan(s), the refinanced amount is reflected here. For loans funded in tranches, lenders can view the disbursal status, disbursed amount, and the amount remaining for funding.

The basis on which the funding is stopped. For example, if this field is set to Draw Period End Date, no disbursal happens after the draw period end date.

If no value is specified, and the disbursal is made after the Draw Period End Date, the maturity date of the contract is derived based on the setting of the org parameter "Keep Same Maturity Date on FIT Disbursal".

For more information, refer to section Defining Org Parameters in the CL Loan Administration Guide.

Activity

The Activity section is dynamic in nature. Any changes to the contract subsequent to its creation are captured in this section. For example, if the lender changes the number of loan terms or the interest rate for a loan contract, then, the current values are visible in this section. In addition, this section gives the current picture of the loan. For example, when a bill is generated, the next due generation date and the next due date get updated. Or, when a loan is rescheduled, the revised maturity date is displayed.

This field is enabled when a periodic fee setup is created for any periodic-fee configured on the loan.

The periodic fees are posted to the customer's loan accounts on a routine basis (typically, weekly, monthly, bi-weekly, semi-monthly, monthly, bi-monthly, quarterly, semi-annually, annually, or on a single payment basis). This fee is applied for specific dates. You can create a periodic fee by defining the time of charge of the fee as Periodic.

Account balance details

Account Balance Details reflects the balances of principal, interest and fees, and is updated whenever a payment is made. Details like any principal adjustments made for the loan, any reserve amount to be utilized against the next payment, or waived interest can be viewed in this section. Fields like Interest Accrued are updated daily as interest is typically accrued on a daily basis.

The additional amount paid towards the installment so that it gets deducted in the next installment amount. For example you are suppose to pay 100$ as your installment, you decide to pay 120$. The extra 20$ will be considered as the reserve amount and is automatically applied to the next bill when it is generated. Else, it is just maintained as excess on the account.

This field is not applicable for Flexible AMZ and LOC loans.

Delinquent dues

This section is relevant for contracts that have become delinquent. Details like the aging bucket, and delinquency amount denote typical information about delinquent accounts. For a delinquent loan, the loan status field displays the value Active Bad Standing. If a loan is not delinquent, the fields of this section are blank.

The aging interval in which the contract falls, based on the delinquency aging intervals defined at the product level. For more information on delinquency intervals and sets, refer to chapter Loan, section Delinquency Aging - New.

For information on adding this field to the CL Contract page layout, refer to section Configurable Delinquency Aging Intervals.

Payment tolerance and grace period

Grace period is defined at the lending product level but can be modified at the contract level. It defines the limits for days and amounts for delinquency and payoffs. For example, Late Charge grace days defines the number of days by which a borrower can delay a payment without accruing any penalty. Another type is Delinquency grace days. This represents the number of days that a lender waits before moving the loan to Active Bad Standing status in case of non-payment of dues.

Indicates whether the minimum amount due is a Fixed Amount or a Percent of the bill amount.

The maximum value considered for Percent type is 100. This means, if a user specifies the minimum amount due as 200, but specifies the due type as %, then CL Loan considers this to be 100% and not 200%.

If a user specifies the minimum amount due, but leaves the due Type field blank, the system assumes it to be Percent.

This field is not applicable to Flexible AMZ loans.

Fixed amount or percentage of the bill amount that a borrower must pay to avoid late charges on a payment. You can override the value specified at the loan product level, if any.

This field is available in CL Loan version 2.2003 and later. For ongoing contracts created on earlier CL Loan versions, the existing CL Loan behavior applies, whereby, a borrower is not charged a late fee if even 1 cent is received towards a bill. Lenders need to add these fields to the definition of the loan product, to be able to apply this behavior to new contracts and to existing contracts for the remaining payments.

Example:

Loan Amount = 10000

Due Amount = 500, Payment Amount = 90, Due Date = January 31, Current System Date = February 1, Grace Period = 0.

Case 1:

Payment Amount = 90, Minimum Amount Due = 100, Minimum Amount Due Type = Fixed Amount, Payment Date = January 31.

Payment amount received (90) is less than the defined minimum due amount (100). Therefore, when the grace period is over, that is, on February 1, a late charge is created provided late fee is included in the fee set attached to the contract.

Case 2:

Payment Amount = 300, Minimum Amount Due = 50, Minimum Amount Due Type = Percent, Payment Date = January 31.

Payment amount received (300) is more than the minimum amount due (50% of due amount = 250). Therefore, when the grace period is over, that is, on February 1, no late charge is created.

This field is not applicable to Flexible AMZ loans.

Charge off details

A charge off is a debt that has been determined as noncollectable by the lender. The charged off amount includes all outstanding dues on the loan contract till that date. If the loan was in Active-Bad Sanding status, any interest accrued for the outstanding payments on the loan is also added to the remaining interest in the charge off transaction. The charged off amount is updated in the Write Off GL account.

Prepayment penalty

Prepayment Penalty Fee is the fee that a lender may assess when a borrower repays the loan before the scheduled maturity date. 

The prepayment penalty methods must be selected in this field.

• If you selected the method as Fixed, provide the penalty amount, for example, 200. 

• If you selected the method as a percentage value, say, Amount calculated as % of loan amount, specify the % value, for example, 2(%).

Refinance

This is relevant for refinanced loans. Lenders can view the additional amount financed during the refinancing and also the resulting total refinanced amount.

Refinancing a loan involves paying off the current loan(s) with a new loan. The outstanding amount of an existing active loan contract of a borrower is carried forward to a new contract and the existing contract is closed. Refinancing simply means that the existing loan(s) can be restructured in terms of interest rates and the loan terms. Generally, in a refinanced contract an additional loan amount is also disbursed to the borrower. In that scenario, the total loan amount of the new loan contract is the sum of the outstanding amount on the previous loan(s) and the additional loan amount disbursed by the new contract. A lender can choose to refinance a loan that may be in Active Good or Bad Standing status.

Recurring ACH details

Borrowers can make recurrent ACH payments for a loan contract for automatic and faster processing of funds. ACH is a nationwide EFT (Electronic Funds Transfer) system that provides for online inter-bank clearing of credit and debit transactions.

To use ACH, lenders need to enable the ACH feature and configure the bank account details of the borrower. Lenders can see details like the account number, bank name and the amount to be debited from the borrowers account along with the payment frequency. Lenders can stop the recurring ACH payments through the Cancel One Time ACH /Stop Recurring ACH option in the Loan Quick Menu, Loan Actions.

ACH details can be modified as required including the borrower bank details using the Recurring ACH option in the Loan Quick Menu, Loan Actions.

One time ACH details

Borrowers can use the One Time ACH feature to make an electronic transfer of money towards payment on a loan.

ACH is a nationwide EFT (Electronic Funds Transfer) system that provides for online inter-bank clearing of credit and debit transactions.

To use ACH, lenders need to configure the bank account details of the borrower. Lenders can see the account number, bank name and the amount to be debited from the borrowers account. Lenders can cancel a scheduled one time ACH payment through the Cancel One Time ACH /Stop Recurring ACH option in the Loan Quick Menu, Loan Actions.

ACH details can be modified as required including the borrower bank details using the One Time ACH option in the Loan Quick Menu, Loan Actions.

Credit bureau reporting

This section captures information about the loan performance that is reported back to credit bureaus. In the long run, these inputs go towards building the credit history of the borrower with the credit bureaus. The frequency of reporting is decided between the lender and the credit bureau. For example, the lender may send a loan performance report every quarter, or report only the delinquencies.