Rule based rate cards configuration

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Rule based rate cards configuration

Rule Based Rate Cards may vary across different products offered by the lender. When generating pricing, multiple options are produced, each aligned with the specific rate card details, allowing you to select the most appropriate pricing. On any given date, only one rate card is effective for a particular CL product or company. You also have the ability to create, edit, and delete a Rule-Based Rate Card as needed.

To start using the rules based rate cards, configure those by following these steps:

  1. Enable a rule based rate card

  2. Set up a rule based rate card

  3. Define a rule based rate card detail

  4. Associate a rule based rate card to a CL product

Enable a rule based rate card

Note:

  • This is optional for users who are upgrading to the latest Q2 Origination package.

  • Enabling the rule-based rate card, disables all the previous configurations on the rate cards. Similarly, enabling the previous configurations on rate cards disables the rule-based rate card.

To enable the rule based rate cards in the org, follow the steps:

  1. Log in to your Salesforce account.

  2. Go to Setup.

  3. In the Quick Find box, search for Custom Settings, and select it.

  4. Select Org Parameters with the namespace prefix (genesis or org namespace), and select Manage.

  5. Select Edit, and select the Enable Rule Based Rate Card checkbox.

  6. Select Save.

Set up a rule based rate card 

Prerequisites

Before you proceed to set up a loan rate card, ensure that the following prerequisites are met:

  • A company is enabled to set up the rate card for a company.

  • A CL product is created to set up the rate card for a product.

Steps

To set up a loan rate card:

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) > Origination Configuration> Rate Card.

    The Rate Cards page with a list of existing rate cards is displayed. You can create multiple rate cards.

  3. Select  New Rate Card.

    The New Rate Card Setup page is displayed.

  4. Select Loan/ Line of Credit as the record type.

    This is the type of product for which you are creating the rate card.

  5. Select Next.

    The Rate Card Setup page is displayed.

  6. Provide the details as described in the Rate Card Setup table, and then select Save:

    Rate Card Setup

    Field Name Action and Information

    Rate Card Name

    A name for the rate card.

    For example, Construction Loan Rate Card.

    Product Type

    The product you selected on the previous page.
    Description

    Description of the rate card that can help you identify its purpose easily.

    For example, Rate card for construction work-related loan for commercial buildings.

    Company

    The name of the company that is creating the rate card.

    For this, the company must be set up.
    Start Date

    Specify a date from which the rate card is effective.

    The current date is displayed as the default start date, however, you can edit it.

    You can define multiple rate cards with overlapping date ranges. However, only one rate card can be active at any time.
    End Date Specify a date by which the rate card is effective.
    Enabled

    Select this check box if you want to use the rate card, else leave this field blank. 

    At least one rate card must be enabled in order to generate pricing for an application

    Note:

    You cannot enable a disabled rate card later. The following message is displayed if you try to enable a disabled rate card: Error: Disabled rate card cannot be enabled.

    The rate card is created and the page refreshes to display the list of existing rate cards along with the rate card that you have created. Scroll down on this page to configure further details for the rate card. Refer to the following sections on this page for detailed steps for doing this.

Define a rule based rate card details

This section serves the purpose of defining a template for the rate card so that the various attributes of the rate cards can be stored. 

A single rate card can have multiple rate card details by varying elements, such as the financed amount, term, interest rate, and rate factor. This gives you the flexibility of addressing diverse borrower preferences.

On generating pricing, multiple pricing options, corresponding to the rate card details, are generated and you can select the pricing that is most suitable.

Add Rate Adjustments

Q2 Origination provides a separate configuration where the FIs can configure additional margins/rate adjustments based on the application attributes. These adjustments are additive in nature. All adjustments that become applicable on the application are added to the base rate from the rate schedule to arrive at the net interest rate. 

This feature allows FIs to offer differential pricing to their customers based on different application attributes. This is very common in consumer lending where banks want to offer variations like preferential rates based on customer segment, when customer opts for auto debits, margins based on existing relationship value etc. These margins are additive in nature and are usually added to the Index/Base Rate derived from the preconfigured rate cards.

Note:

Adjustments are introduced for Rate Schedules. It has all the filters like rate cards.

The Rule Based Rate Card Setup Details are refreshed to display the saved details. As a business user, you can configure rule based rate card details and associate them with an index. Further, you can associate multiple indices against a single rule based rate card detail.

Prerequisites

Before you proceed to define rule based rate card setup details, ensure that the following prerequisite is met:

  • A rule based rate card is set up. 

Steps

To define rule based rate card setup details:

  1. Hover over Rate Card Setup Details that appears below the list of existing rate cards and then select New Rate Card Setup Detail. Alternatively, scroll down and select the New Rate Card Setup Detail button.

    The Rate Card Detail Setup page is displayed.

  2. Provide the details as described in the Information, Adjustments, Financials sections in the following table, and then select Save:

    Field Name Action and Information
    Information
    Rate Card Name This field indicates the rate card name specified in the previous section.
    Product Type This field indicates the product you selected on the previous page.
    Enabled This field indicates  if the rate card is active. 
    Max Term Specify the maximum term to which the rate card applies.
    Adjustments
    Adjustment Description Specify the nature of rate adjustment. For example, Auto Debit Margin.
    Adjustment % This is actual margin/rate adjustment that needs to be applied.
    Adjustment Term The user must specify the term/units( 3/Years) for which the rate adjustment will be applied. The rate adjustment must always be applied from the start of the loan. (A rate adjustment of -0.5% will be applied for the 1st 3 years of the loan term). If the term/Units is blank, then the rate adjustment is applicable for the entire loan term.
    Adjustment Units
    Financials
    Pricing Method

    Select the method used to price a loan application. 

    The supported options are:

    • Rate Factor
    • Interest Rate
    • Rate Schedule
    • Adjustment
    Note:

    Rate Factor is not applicable for loan applications.
    Rate Factor

    If you select Rate Factor as the Pricing Method, specify the rate factor. 

    For example, specify 0.08 for a rate factor of 8%.
    Interest Rate (%)

    If you select Interest Rate as the Pricing Method, specify the interest rate. 

    For example, specify 8 for an interest rate of 8%.
    Pricing Factors This field indicates all the permutations of Terms and Frequency or related pricing factors.
    Rate Schedule Setup

    Rate schedule means schedule of interest rate applicable from time to time on an application.

    If you select Rate Schedule as the Pricing Method, perform the following:

    1. Select Add.
    2. Specify all the fields such as, Rate Type as Fixed or Floating, Index, Margin Rate, Interest Rate, Terms, Unit.
    3. Select Validate.
    Term

    Specify the number of months for which the loan is extended.

    Note:

    This field is applicable only for Lease Product.
    Payment Frequency

    Specify the repayment frequency.

    The supported options are:

    • Monthly
    • Quarterly
    • Annually
    Note:

    This field is applicable only for Lease Product.

    Rate Factor Based Amount

    This field represents the total lease amount on which the rate factor is calculated.

    Note:

    This field is applicable only for Lease Product.
    Residual Type

    This field represents the residual value type applicable for the rate card.

    The supported option is:

    • Fair Market Value

    Note:

    This field is applicable only for Lease Product.
    Residual %

    This field represents the residual percentage of a value or substance which is remaining after the completion of lease.

    Note:

    This field is applicable only for Lease Product.

Define Rules

Define a rule and the criteria to select the objects for which you want to generate rule based rate cards.

Prerequisites

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

  • The rule based rate card is configured.

Steps

To define the rules for the rule based rate card:

  1. After configuring the rule based rate card, in the Rule Generation section that is displayed and then add the new rule.

  2. Provide the details as described in the following table, and then select Save:

    Field Name Action and Information
    Rule name 

    Specify the name of the rule being defined.
    Object

    Select the object type on which the defined rules are to be run. 

    The objects that satisfy the defined criteria in the rules are fetched, and the associated rate cards gets generated. 

    Note:

    Currently, we are supporting only the Application object.

  3. In the Criteria Details section, provide the details as described in the following table, and then select Save:

    Field Name Action and Information
    Sequence The sequence number of the defined criterion is associated with the rule.
    Related Object The object type on which the rule is to be defined. 
    Field Name The field or attribute of the object that is being measured or evaluated through the evaluation rule.

    Lookup Object Field Name

    Second Level Lookup Field

    The value of the lookup object selected in the Field Name field. 
    Operator Select the required operator to define value or the range of values for the field. 
    Value

    This value is evaluated or matched while defining the criteria. 
    Evaluation Rule 

    Defines the order in which the defined criteria should be evaluated. In the case of multiple criteria, this can be achieved using the evaluation expression. 

    For example, 1 AND 2.

Associate a rule based rate card to a CL product

  1. On the Rate Cards page, select New Product Rate Card Association in the Product Rate Card Association section.

  2. Select the CL Product and the Rate Card Setup name that you want to associate and then select Save.

    This rate gets defaulted to all the applications associated with the CL product, but can be modified at the application level.

 

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