Schedule Balance Delinquency Basis
Overview
With the Schedule Balance delinquency basis, whenever a borrower is making an extra payment the excess amount goes toward the Excess field and satisfies the fee, interest, and principal remaining if the Payment Application Mode is Current Dues. Here, it is ensured that the loan balance on a particular date is less than or equal to the closing balance of the current schedule to avoid any delinquency on the contract. This is achieved by creating a bill that is required to match the closing balance of the current schedule.
For example, the EMI is $500 and the borrower has made a payment of $600. With the payment application mode as Current Dues, the $100 gets deposited to the Excess field. To utilize this excess amount of $100 and to avoid the contract from turning delinquent, the next bill is generated for $400.
The Schedule Balance delinquency basis works only for IPT enabled contracts.
The Payment Application Mode has to be either Deposit or Current Dues.
When the Payment Application Mode is Deposit, the excess amount gets deposited to the deposit account rather than satisfying the fee, the interest, and the principal remaining.
Configuration
While creating a lending product, select the Payment Application Mode as Current Dues or Deposit.
While creating a contract for the same product, select the Delinquency Basis as Schedule Balance.
Calculation of Fees in Schedule Balance
This section describes the calculation of fees on a contract for various conditions when the Payment Application Mode is Current Dues.
Include in Dues | Include in Schedules | Add Fee to Bill Amount | Fee Capitalization | Result (Current System Date is March 1, 2013) |
---|---|---|---|---|
True | True | True | On April 1, 2013
| |
True | False | False | On April 1, 2013
| |
True | True | False | On April 1, 2013
| |
True | True | On May 1, 2013 (On April 1, 2013, the bill is not paid)
| ||
True | False | On May 1, 2013 (On April 1, 2013, the bill is not paid)
| ||
False | False | On May 1, 2013 (On April 1, 2013, the bill is not paid)
|
Calculation of the Bill Amount
This section discusses the calculation of the bill amount when a borrower makes an excess payment.
Prerequisites
The following are the prerequisites to calculate the bill amount:
A lending product is created with Payment Application Mode as Current Dues.
The contract is approved and the fund is disbursed.
About this Scenario
For better understanding, the concept is being explained with the help of the following example and the set of instructions on how to go about it.
A contract is created, approved and the fund is disbursed with the following terms and conditions:
System Date 3/1/2013 Payment Application Mode Current Dues Loan Amount $10,000 Interest Rate 10 Delinquency Basis Schedule Balance Is Interest Posting Yes Interest Posting Frequency Monthly Term 10
Steps
Perform the following steps to calculate the bill amount:
Log in to your Salesforce account.
Click the App Launcher.
Search for CL Loan, and then click it.
On the CL Contracts tab, select the required CL Contract ID.
The following image highlights the loan details on disbursal:
Click Repayment Schedule.
The amortization schedule is generated as depicted in the following image:
Go to Servicing Configuration > SOD/EOD Process, and update the Move System Date to April 1, 2013.
On the CL Contracts tab, select the required CL Contract ID and go to Transactions > Bill(s). A bill of amount $1,046.40 is generated, and interest of $83.33 is posted as highlighted in the following image:
Go to Payment(s) > New Loan Payment Transaction and make a payment of $1,500.
After the payment, the New Loan Balance = Loan Balance - Due Principal - Extra Payment Made = $10,000 - $963.07 - $(1,500 - 1,046.40) = $8,583.33.
Go to Servicing Configuration > SOD/EOD Process, and update the Move System Date to May 1, 2013.
On the CL Contracts tab, select the required CL Contract ID and go to Transactions > Bill(s). A bill of amount 589.02 is generated and interest of $71.53 is posted as highlighted in the following image:
Go to Payment(s) > New Loan Payment Transaction and repay the bill amount.
After the payment, the New Loan Balance = Loan Balance - Due Principal = $9,036.93 - $971.09 = $8,065.84.