Rate cards configuration
Rate cards may vary for different products offered by a lender, with each rate card potentially containing multiple details based on factors like financed amount, term, interest rate, and rate factor. This flexibility allows for catering to diverse borrower preferences. When generating pricing, multiple pricing options are produced, each aligned with the different rate card details, enabling you to choose the most suitable one. You can further customize a rate card by defining additional parameters or factors to create more relevant offerings. For example, offer a lower rate of interest to borrowers with insurance or add the number of years of employment remaining as a factor in the evaluation of an application. These parameters are specific to each rate card and can be made available or unavailable for all related rate card details. While saving the additional determining factor, you can provide benchmark values for the fields you have included in the factor definition. An application's inputs are measured against these benchmark values. On any given date, only one rate card is effective for a specific CL product or company.
The configuration of a rate card for a loan application involves the following three steps:
Set up a 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. For information refer to, Setting up and viewing a company
A CL product is created to set up the rate card for a product.
Steps
To set up a loan rate card:
Log in to your Salesforce account.
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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.
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Select New Rate Card.
The New Rate Card Setup page is displayed.
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Select Loan/ Line of Credit as the record type.
This is the type of product for which you are creating the rate card.
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Select Next.
The Rate Card Setup page is displayed.
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Provide the details as described in the Rate Card Details and the Filterssection in the following tables, and then select Save:
Field Name Action and Information Rate Card Name
A name for the rate card. For example, Construction Loan Rate Card.
Product Type
This is the product that 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 checkbox 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.
Field Name Action and Information Filter By Loan Amount/Credit Limit Select the Filters to apply to the rate card. You can filter the rate cards based on the parameters you select here while presenting pricing options to a customer. For example, if you select Filter By Loan Amount here, then, the rate card is used for generating pricing options only if the applicant's desired loan amount falls in the range of the minimum and maximum loan amount (specified in the rate card detail).
If checked, loan amount or credit limit (only in case of the line of credit application) will be considered while filtering the available pricing options else not.
Filter By Term If checked, the term is considered while filtering the available pricing options else not. Filer By Credit Rating If checked, credit rating will be considered while filtering the available pricing options else not. Filter By Frequency If checked, the payment frequency will be considered while filtering the available pricing options else not. 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 rate card detail
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
Now, 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.
If you want to define Additional determining factors, refer to Additional determining factors setup.
Adjustments are introduced for Rate Schedules. It will have all the filters like rate cards.
If you want to define Additional determining factors, refer to Additional determining factors setup.
Prerequisites
Before you proceed to define rate card setup details, ensure that the following prerequisites are met:
A rate card is set up.
Steps
To define rate card setup details:
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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.
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Provide the details as described in the Information and Criteria sections as described in the following tables, and then select Save:
Field Name Action and 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. Adjustment This field indicates if rate adjustment is allowed for this rate card.
On selecting this checkbox, the Adjustments section is displayed.
Field Name Action and Information Min Financed Amount Specify the minimum requested loan amount to which this rate card applies.
Max Financed Amount Specify the maximum requested loan amount to which this rate card applies. Term Specify the number of months for which the loan is extended. Payment Frequency Specify the repayment frequency.
The supported options are:
- Monthly
- Quarterly
- Annually
Credit Rating Select the credit rating of the borrower. Days Convention Select the method that is to be used for the calculation of interest.
The supported options are:
- 30/360
- 365/365
- Actual/Actual
- 366/365
Min Term Specify the minimum term to which this rate card applies. Max Term Specify the maximum term to which the rate card applies. Use Additional Determining Factors Select this checkbox if you want to customize the rate card based on the additional parameters. For more information you can refer to Additional determining factors setup.
Adjustments
Field Name Action and Information 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 Additional Determining Factors
If an additional determining factor is associated with the rate card setup details, then these fields are populated with the configured value.
Field Name Action and Information Determining Factor Name Name of the additional determining factor. Evaluation Operator The operator applied on the values in the factor, for example, >, <, >=. Required for Indicates whether the factor is used in the rate card detail. Type Indicates the type of the field. Value Indicates the value of the criteria. Applicable for Application Indicates whether this factor will be used while price applications Pricing Details
Field Name Action and Information 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%.
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:
- Select Add.
- Specify all the fields such as, Rate Type as Fixed or Floating, Index, Margin Rate, Interest Rate, Terms, Unit.
- Select Validate.
The Rate Card Setup Details are refreshed to display the saved details.
As a business user, you can configure rate card details and associate them with an index. Further, you can associate multiple indices against a single rate card detail.
Associate a rate card to a CL product
On the Rate Cards page, in the Product Rate Card Association section, select New Product Rate Card Association.
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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.