Excess Amount

Overview

This page explains how the excess amount in a loan is created, moved, and refunded.

Excess amount/ What is the excess amount?

Any additional repayment made on the loan account is stored as an excess amount. This amount must be seen differently from any excess amount that may result due to the loan payment schedule set up on the contract.

For example, the payment amount of $209.78 is rounded off to the next digit as $210 by the system. Such differences in amounts are settled in the last payment on the loan.

Creation of excess amount/When does an amount be considered an excess?

Simple Loans product type

In a Simple Loan type of loan product, an amount is assigned to the Excess field in the following scenarios:

• When a payoff is greater than that required to close the loan, the extra amount is set as an Excess amount.

• When a payoff greater than the amount required is made before the Draw Period End Date (DPED) in FIT-enabled loans, the extra amount is set as Excess. When you do a payoff after the DPED, then your loan will get closed. And once the loan is closed, you can then refund the amount to the borrower.

Flexible AMZ product type

In a Flexible AMZ type of loan product, when the borrower pays more than the required amount, the extra amount flows to the Excess.

The ways in which excess amount is managed in a Flexible AMZ loan are listed as follows:

• If the AutoCreate Transaction option is selected, then on the Next Due Date, the system automatically creates a payment transaction for the excess amount (The excess job, ExcessForAmzBasedLoansJob,  creates the Excess LPT). Based on the bill amount, this excess is completely consumed, or part of it is again moved to Excess.

• If the AutoCreate Transaction option is not selected, the lender has to manually refund the excess amount to the borrower.

• If the Excess Threshold for Reschedule is specified, any excess payment more than the threshold specified causes the contract to be rescheduled.

  The Excess Field

  

Manage the excess amount

You can either move the excess amount to satisfy the dues by reducing the Principal Remaining or refund the excess amount to the borrower. However, you cannot move or refund more than the amount specified in the Excess field.

To do this, select one of the following while adjusting the excess amount:

• Refund To Borrower

• Reduce the Principal Remaining