Recording a loan payment

Overview

During the life of the contract, borrowers make payments against bills and charges created against the loan. Every borrower payment in CL Loan is recorded as a loan payment transaction (LPT). Bills and charges that are generated are displayed in the Bills and Charges sub tab of the Transactions tab of the loan contract. Once you record a borrower payment, you can associate the transaction or LPT to the respective bill or charge from the bill or charge details page. 

The payment by the borrowers can be applied to satisfy the bills in the following two ways:

• Automatic Spread - the system applies the amounts in the order of the spread defined, and as per the amounts due.

• Manual Spread - manually distribute the amount between the different balance types in the payment spread.

Excess payments: In case of a manual spread, if you assign an amount greater than the due amount for any balance type, it is reserved as excess and settled at the time of contract maturity, and a Payment Type of 'Excess' is created. It does not earn any interest for the borrower, and nor does it reduce the principal balance remaining on the loan, unless the extra amount is paid towards principal. For example, if the fee amount due is 50 and you manually assign an amount of 100 for Fee, the extra 50 does not go towards reducing the principal balance. CL Loan maintains it as excess amount collected from user, and settles it at contract maturity.

Write-off recovery payments: When you create an LPT for a write-off recovery payment, a Payment Type of ' Write-Off Recovery' is created. You can use the default spread of Principal, Interest and Fees to satisfy the written off amounts. Alternatively, you can specify a custom payment spread that must be used. The charged off principal, charged off interest and charged off fees are considered by the system as principal remaining, interest remaining and charges remaining, and the recovery amount is applied in the order of the spread to satisfy these.

Refinance payments: Refinancing a loan is creating a new loan contract by paying off one or more existing loans. It is a consolidation of all of borrowers existing loans. While settling  a Refinance transaction an LPT of the Payment Type 'Refinance' is created.

Principal adjustment-sub payments: Loan Principal Adjustment is carried out when a borrower requests to disburse an additional principal amount or requests to reduce the principal amount on an existing contract. In the latter case, an LPT of payment type 'Principal Adjustment - Sub' is created. 

Record a Loan Payment

Prerequisites

The following is a prerequisite to recording a loan payment:

• Loan is approved and funded.

Steps

To record a payment:

1. Log in to your Salesforce account.

2. Click CL Contracts.

3. Select the required CL Contract ID.

4. Click Transactions.

5. Click New Loan Payment Transaction.

6. Specify the Transaction Date.

7. Select the Write off Recovery checkbox if the payment is a write-off recovery payment.

8. Click the Override Payments To Deposit checkbox if you want the payment to not go to the virtual deposit account.

9. Select the Payment Application Mode.

10. Enter the Payment Mode. For example, such as Cash, Check, Wire, Excess, ACH. The payment mode defaults to the value selected in the Payment Mode field in the contract on Payments screen. If nothing is selected in the contract, then the default payment mode is Cash.

11. Specify the Transaction Amount.

12. If you want to manually spread the payment amount:

    1. Click the Spread Manually checkbox.

    2. Specify the Fee, Interest, and Principal amounts, or the amounts for the balance types as per the spread definition. The Transaction Amount is the sum of Interest, Principal and Fees. For example, if you have entered the Principal as 500, Interest as 50 and Fees as 50, the system automatically calculates the transaction amount as 600 (500+50+50).

       If an additional interest component exists on the contract, then specify the Fee, Additional Interest, Interest, and Principal amounts, or the amounts for the balance types as per the spread definition. Click the arrow to see a list of the interest components available to make payments.

13. To use a custom payment spread, search for and select the Loan Payment Spread.

    Note:

     If this field is not selected, then the system considers the default spread as Fees, Interest, and Principal. 

14. Click Validate to validate the transaction amount.

15. Click Save. 

If an approval process is set up for the LPT, it is submitted for approval. Else, the loan transaction ID is marked as Cleared once the transaction is successfully processed and funds are received. For more information on defining transaction approval config, refer to the section Defining Transaction Approval Config in CL Loan Administration Guide. 

Field Reference