Automatic Rescheduling of a Contract
In CL Loan 2.3007 and later, the excess payment made by the borrower may trigger an automatic reschedule of the loan if the excess amount is greater than a predefined threshold value. Here, excess is the amount that remains when the outstanding principal, interest, and any charges are paid off. The excess payment is applied to the principal remaining as follows:
Flexible AMZ loan - If the excess payment crosses the predefined threshold value, the Principal Remaining is reduced by this amount. Else, this amount remains as excess on the contract.
For regular loan - Principal is always reduced when an excess payment is made, irrespective of the predefined threshold value. The threshold value only governs whether contract must be reschedule or not.
For example, as per payment schedule:
Principal due = 150
Interest due = 50
Payment received = 300
Excess = 150
Principal remaining after current schedule = 200
Excess Threshold % for reschedule = 50% of principal remaining
The excess payment of 150 causes a reschedule of the loan, since 150 = 75% of principal remaining, which is greater than the threshold value.
The reschedule happens through the Loan Reschedule Job, which runs as part of the SOD job or can be scheduled. Therefore, when any payment crosses the threshold amount for reschedule, the Reschedule Status of the contract is updated to Pending. No further payments are cleared till the loan is rescheduled. Once the batch job completes, the status is updated to Failed or Success.
The loan is rescheduled based on the Reschedule Option on Excess Payment set up at the product level, by default. However, you can modify this value at the contract level.
If the Threshold % is specified as null, excess payment does not cause an automatic reschedule. For Threshold % of "0", a reschedule occurs only if a reschedule option is specified on the product or contract level.
If you have upgraded to CL Loan 2.3007, you must modify the lending product page to add these two fields. For more information, refer to section Automatic Reschedule of Loan.
For information on defining the reschedule options for excess payment, refer to the Loan and Amortization Based Loan sections in the CL Loan Administration Guide.
Automatic rescheduling can be set up only for new contracts created for the lending product. Existing contracts are not impacted by any changes you make. However, if you modify a lending product to specify a Threshold %, then you must update the contracts for that product to specify the reschedule option, else reschedule fails.
In CL Loan 2.4008 and later, the reschedule of the loan gets reversed if you reverse the payment that caused it, and the original payment schedule is re-applied. CL Loan maintains a snapshots of the bills, LPTs, schedules, RSS, original rate schedule, and any holiday or step up schedules on the contract. At the time of reversal of reschedule action, the record IDs in the snapshots are un-archived and made primary. Any IPTs created after reschedule are discarded and new IPTs are created again as on the original reschedule action date. Similarly, any generated bills are discarded and new bills are generated for the new schedule after reversal.
If a reschedule is manually done after a prepayment, then neither the payment, nor the reschedule action can be reversed.
Prerequisites
The following are the prerequisites for automatic loan reschedule:
Financial Calculator version is 3.0 or higher.
For Keep Same Payment Amount (calculate term) reschedule option, active amortization schedule is available for the loan contract.
The repayment method is Equated Principal.
Steps
Perform the following steps to modify the Reschedule Option on Excess Payment:
Log in to your Salesforce account.
Click CL Contracts.
Click the Contract ID for which you want to update the reschedule option.
Modify the value in the Reschedule Option on Excess Payment drop down field.
Click Save.