Rate Schedule Setup
Overview
Using the Rate Schedule Setup you can define schedules that have flexible rate of interests - a combination of floating and fixed rates of interest. These schedules are defined for a lending product that are defaulted to the contracts and can be modified there. You can use this feature to also define periods where you may not want to charge any interest to your borrowers. For this, you can create a row with interest rate as zero in the rate schedule.
To know more about floating interest, refer to Floating Interest.
Floating rate functionality is not included in Investment Product.
Defining flexible Interest Rate Schedules for a Lending Product
Log in to your Salesforce account.
Click Servicing Configuration.
Go to Product > Product Management.
Click Rate Schedule Setup.
Select Loan Product in Product Type.
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Associate the setup with a product as shown in the following image:
The defined setup displays in the Interest Rate Schedule section of the product as shown in the following image:
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Create a contract from the product that you associated with the flexible rate schedule setup. The set interest rate schedule appears under Schedules > Rate Schedule section.
Understanding the interest rate schedule for the contract
A floating rate of interest is charged starting from November 12, 2018. This floating rate is calculated using the Floating Index Rate defined under Test Float (12%), Margin Rate (3%), and the monthly Rate Revision frequency (defined in a contract).
Charged a fixed rate of interest of 15%, starting from December 17, for the rest of the terms.
Defining flexible Interest Rate Schedules for an Investment Product
The certificate rate is applied to an investment order as per the rate schedule defined for the associated lending product.
Prerequisites
The following is the prerequisite to define a flexible rate schedule for an investment product:
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An investment product is created.
Note:To know how to create an investment product, refer to Investment Product.
Steps
Perform the following steps to define flexible rate schedules for an investment product:
Log in to your Salesforce account.
Click Servicing Configuration.
Go to Product > Product Management.
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Click Rate Schedule Setup.The following page is displayed:
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Specify the details as described in the following table, and then click Save.
Field Name Action Setup Rate Schedule for Product section Select Product Type Select Investment Product. Setup Rate Schedule for Investment Product section Loan Product Select an investment product. Interest Rate Schedule sub section Interest Rate Specify the certificate rate for the selected investment product. Terms Specify a number to indicate the period for the interest rate. Unit Specify the unit for the terms specified. For example, Days, Weeks, Months, or Years. Note:You can add rate schedules by clicking Add.
To know how to change the certificate rate in an investment order, see Certificate Rate.
If you try to add a rate schedule in the Rate Schedule Setup for a loan product that is configured for a fixed type of interest rate (not floating) and has the Flexible Rate flag set to false, the system displays the following error message:
"Rate schedule can be set up only when interest type is floating or billing method is flexible repayment."