Loan fees setup

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Loan fees setup

Fees in Q2 Origination enables financial institutions to manage fees associated with the origination process. Financial institutions can define the types of fees that are available to the borrowers, as well as configure fee templates for reuse and associate them with products. Likewise, loan officers can apply these pre-defined fee templates, as well as any ad-hoc fees that they create, to opportunities and manage fee-related information such as fee amount and a payment method from within the application. They can modify the fee by giving a discount on it or can remove the fee as well if the Override Fee flag is enabled.

To set up fees for the lending products:

  1. Set up VAT.

  2. Loan fees setup

  3. Loan fees setup

  4. Assign a Fee to a Fee Set

  5. Associate a Fee Set with a Lending Product

VAT Setup

VAT (Value Added Tax), also known as GST (Goods and Services Tax) in some countries, is a tax that is levied on the price of a product. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer.

In Q2 Origination, a VAT setup includes:

  1. Defining the type of VAT.

  2. Assigning rates to the VAT.

Note:

A VAT setup is required if the fee charged to the borrower is taxable.

Define a VAT Type

Prerequisites

None.

Steps

To define a VAT type:

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) > VAT Setup.

    The New VAT Setup window is displayed.

  3. In the New VAT Setup window, provide the details as described in the following table, and then select Save:

    Field Name Action and Information
    Rate Type Specify the type of VAT.For example, specify TestGST.
    Description Specify a description for the VAT.
    Active Select this check box to enable the VAT Setup for use.

Assign Rate to the VAT

Prerequisites

Before you proceed to assign a rate to the VAT, ensure that the following prerequisite is met:

  • A VAT Setup is created.

Steps

To assign VAT rates to a VAT Setup:

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) > VAT Rates.

    The New VAT Rate window is displayed.

  3. In the New VAT Rate window, provide the details as described in the following table, and then select Save:

    Field Name Action and Information
    VAT Rate Name Specify a name for the VAT Rate.
    Code

    Select the VAT Setup to which you want to assign the VAT Rate.

    For example, select TestGST.
    Effective From

    Select the date from which the VAT rate is applicable on the fee.

    Depending on the specified date, the system calculates the tax on the fee.
    Rate Specify the VAT Rate in percentage.

Define a Fee

Define the fees that your loan officers can attach to a loan application. When defining a new fee, you indicate the amount, event type, currency, calculation method, frequency, minimum amount, maximum amount, and whether the fee amount can be modified by the loan officers. You can update the fee setup at any time. You cannot delete a fee attached to an approved loan. You can end date fees that you no longer want to use.

Prerequisites

Before you proceed to define a fee, ensure that the following prerequisite is met:

  • A VAT Setup is created, and at least one VAT rate is assigned to it for a taxable fee.

Steps

To define a fee:

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) >  Origination Configuration >  Credit and Pricing Setup >  Pricing Setup >  Fee Definition.

  3. Select New. 

    The New Fee Definition window is displayed.

  4. In the New Fee Definition window, provide the details as described in the following table, and then select  Save:

    Field Name Action and Information
    Amount

    Specify the amount.

    This is an amount or percentage value to be charged to the borrower. For example, if the fee is calculated as 1% of the borrowing amount, specify 1 in the Amount field.
    Fee Definition Name

    Specify a name for the Fee.

    For example, Documentation Fee.
    Active

    Select this check box to enable this fee for use.
    Event

    Select Loan Origination for loan applications.
    Frequency

    Select a frequency.

    The supported options are:

    • One-Time
    • Daily
    • Weekly
    • Monthly
    • Yearly
    Note:

    This is required for periodic fees. When Include in Dues flag is enabled, then Frequency can be any option other than One-Time.
    Implementation

    Specify the Implementation Class if the fee calculation method is Custom.

    This class calculates the custom fee amount. During the contract tenure, many fees may be applied to origination, such as late fees, pre-payment fees, and NSF fees. On most occasions, these fees have a fixed value.

    However, there may be scenarios where you may have a specific mechanism to compute the value of the fee.

    For example, you may define a custom fee calculation as % of the payment amount + % of the principal balance. Or, % of payment amount * no of terms remaining. 
    Calculation Method

    Select the Calculation Method as Fixed or Amount calculated as % of borrowing amount.

    The fee can be a fixed amount or derived as a percentage of an amount. If Amount calculated as % of borrowing amount is selected, then the fee is calculated as the percentage of the loan amount (% is captured in the Amount field).
    Class

    Select the Class as Income or Expense.

    The fee is recorded in the selected class for the contract term.
    Maximum Amount

    Specify the maximum fee amount to be charged to a borrower.

    Note:
    • This applies to both Fixed or Amount calculated as % of borrowing amount.
    • If Amount calculated as % of borrowing amount is selected, then the fee is calculated as the percentage of the loan amount (% is captured in the Amount field). This calculated amount cannot be greater than the Maximum Amount.
    • When the loan officer modifies the fee amount, the modified amount cannot be greater than the Maximum Amount.
    Maximum Discount Amount

    Specify an amount that a loan officer can give a maximum discount on the selected lending product.

    The discounted value is the difference between the revised fee amount and the original fee amount that can be <= to this Maximum Discount Amount.
    Minimum Amount

    Specify the minimum fee amount to be charged to a borrower.

    Note:
    • This applies to both Fixed or Amount calculated as % of borrowing amount.
    • If Amount calculated as % of borrowing amount is selected, the fee is calculated as the percentage of the loan amount (% is captured in the Amount field). This amount cannot be lesser than the Minimum Amount.
    • When the loan officer modifies the fee amount, the modified amount cannot be lesser than the Minimum Amount.
    Fee Payment Method

    Select the method in which the fee will be collected.

    The supported options are:

    • Borrowers funds brought to closing.

    • Subtract from loan proceeds

    • Add to amount financed - If this option is selected, then the fee amount is added to the Requested Loan Amount/Requested Credit Limit. 

      Loan Amount = Requested Loan Amount(original loan amount) + Total Fee Amount

      Credit Limit = Requested Credit Limit + Total Fee Amount

    Note:

    This applies to non periodic fees where the Frequency is One-Time, and the Include In Dues flag is disabled.
    Fee Payment Timing

    Select the Fee Payment Timing as Before Closing or At Closing.

    This field identifies when to collect the fee.
    Fee Paid By

    Select the party who is responsible for paying the fee.

    The supported options are:

    • Borrower
    • Lender
    • Third Party
    • Seller
    Note:

    This field is used for information capture only in Q2 Origination.
    Override Fee Select this check box to allow the loan officer to modify the fee amount.
    Include In Dues

    Select this check box to add the fee to the bill.

    Note:
    • This is applicable only for Periodic Fees. 
    • The fee is displayed on Payment Schedule > Fee Schedule.
    • If this check box is selected, the fee amount is reflected in the bill. The borrower must pay the entire bill amount to avoid delinquency.
    • If this check box is not selected, payment of fee amount does not affect bill satisfaction. The borrower payment is applied to the bill as per the payment spread, and delinquency is accordingly determined.
    Include in APR Select this check box to include the fee in the APR calculation.
    Taxable Select this check box to calculate the tax amount on the fee.
    VAT Rate

    Select the VAT Rate to calculate the applicable taxes on the fee.

    For example, select TestGST.

    This is applicable if the Taxable flag is enabled.

Create a Fee Set

A fee set is a combination of multiple fees. You can attach a fee set to a lending product to define the default set of fees to be applied on contracts for that lending product.

Prerequisites

Before you proceed to create a fee set, ensure that the following prerequisite is met:

  • One or more fees are set up.

Steps

To create a fee set:

  1. Log in to your Salesforce account. 

  2. Go to  (App Launcher) > Q2 Origination.

  3. To create a fee set, select Fee Set and then select New.

  4. In the New Fee Setwindow, provide the details as described in the following table, and then select Save:

    Field Name Action and Information
    Fee Set Name

    Specify a name for the fee set.

    For example, specify Loan Fee Set.

Assign a Fee to a Fee Set

Prerequisites

Before you proceed to assign a fee to a fee set, ensure that the following prerequisites are met:

  • Required fields are added to the New Fee Set/Fee window.

  • A Fee Set/Fee tab is created and added to the home page.

  • A fee definition is created.

  • A fee set is created.

Steps

To assign a fee to a fee set:

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) > Q2 Origination.

  3. To assign a fee to a fee set, select Fee Set/Fee, and then select New.

  4. In the New Fee Set/Fee window, provide the details as described in the following table, and then select Save:

    Field Name Action and Information
    Fee

    Select the fee definition you want to associate with the fee set.

    For example, select Documentation Fee.
    Fee Set

    Select the fee set you want to associate with the lending product.

    For example, select Loan Fee Set.

Associate a Fee Set with a Lending Product

Prerequisites

Before you proceed to associate a fee set with a lending product, ensure that the following prerequisite is met:

  • The required fee is assigned to a fee set.

Steps

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) > Q2 Origination > Origination Configuration > CL Product.

  3. In the New CL Product: Loan/New CL Product: Line Of Credit/  New CL Product: Package window, select the required Fee Set along with other required details, and then select Save.

    For example, select Loan Fee Set.

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