Installment Payment for F-AMZ Loan
Overview
Installment payment is the regularly scheduled payment that includes repayment of a portion of the principal amount borrowed, and also the payment of interest on the debt.
With the Hydrogen release, borrowers can repay the future schedules in advance at any point in timein Flexible-AMZ type loans irrespective of the due date. This feature allows the lenders to collect payment for future installments including principal and interest. This is achieved by closing the interest posting transaction by calculating the extra interest expected to be posted from the current date to the installment date. Until the installment date, the loan account is locked and no other loan actions, such as rate change and term extension can be performed.
For this option to be available, the Installment Paymentflag must be enabled. The following are the two setups where you can enable the Installment Payment flag:
Manual Payment Setup
Automated Payment Setup
Configure Installment Payment on Manual Payment Screen
Prerequisites
The following are the prerequisites to configure the installment payment for an F-AMZ contract on the manual payment screen:
- An F-AMZ lending product is created with the Excess Threshold % for Reschedule as null or zero, and the Payment Application Mode as Future Dues.
- An F-AMZ contract is created for this product.
- Interest Posting is enabled, and Interest Posting Frequency is defined.
- The contract is approved and disbursed.
About this Scenario
For better understanding, the concept is being explained with the help of an example, and a set of instructions on how to go about it.
An F-AMZ lending product is created with the following terms and conditions:
Payment Application Mode Future Dues Excess Threshold % for Reschedule Zero An F-AMZ contract is created with the following terms and conditions for the preceding lending product:
Loan Amount $20,000 Interest Rate 15 Term 20 Expected Disbursal Date 3/1/2013 Payment Start Date 4/1/2013 Payment Frequency Monthly Is Interest Posting Yes Interest Posting Frequency Monthly The contract is approved and disbursed.
Steps
Perform the following steps to configure the installment payment for an F-AMZ contract on the manual payment screen:
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, and then click Repayment Schedule.
The amortization schedule is generated as depicted in the following image:
Go to Transactions > Payments.
Click New Loan Payment Transaction.
On the Record a paymentpage, perform the following actions, and then click Save:
Select this checkbox to enable installment payment.
Specify the date up to which the borrower wants to make the repayments. Example:
If a borrower wants to make the repayment for consecutive four months, then specify the Installment Date as July 1, 2013, considering the payment start date as April 1, 2013.
Specify the Payment Mode.
Specify the amount that the borrower wants to repay. Example:
If the borrower wants to make the repayment for consecutive four months, then specify the Transaction Amount as $4,547.4 ($1,136.85*4), considering the monthly repayment amount as $1,136.85.
If the borrower wants to repay $5,000, then specify the Transaction Amount as $5,000.
Click Repayment Schedule.
The due amount is marked paid until July 1, 2013.
Go to Transactions > Payment(s).
One Loan Payment Transaction is generated and is marked cleared.
Go to Transactions > Interest Postings.
Four IPTs are created of Closed status, and one IPT of Open status with zero due amount.
Go to Transactions > Bill(s).
Four bills are generated and satisfied.
Configure Installment Payment Through Automated Payment Setups
Prerequisites
The following are the prerequisites to configure the installment payment for an F-AMZ contract through the automated payment setups:
An F-AMZ lending product is created with the Excess Threshold % for Reschedule as null or zero, and the Payment Application Mode as Future Dues.
An F-AMZ contract is created for this product.
Interest Posting is enabled, and Interest Posting Frequency is defined.
The contract is approved and disbursed.
Steps
Perform the following steps to configure the installment payment for an F-AMZ contract through the automated payment setups:
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, and go to Automated Payment Setups > New Automated Payment Setup.
In the New Automated Payment Setup window, perform the following actions, and then click Save:
Specify the Payment Mode.
Specify the bank account from which the amount is debited.
Specify the amount that the borrower wants to repay. Example:
If the borrower wants to make the repayment for consecutive four months, then specify the Transaction Amount as $4,547.4 ($1,136.85*4), considering the monthly repayment amount as $1,136.85.
If the borrower wants to repay $5,000, then specify the Transaction Amount as $5,000.
Select the Type as either RECURRING or ONE TIME.
Specify the date up to which the borrower wants to make the repayments. Example:
If a borrower wants to make the repayment for consecutive four months, then specify the Installment Date as July 1, 2013, considering the payment start date as April 1, 2013.
Select this checkbox to enable installment payment.
Example
A flexible AMZ contract is created with the following terms and conditions:
| Payment Application Mode | Future Dues |
| Loan Amount | $20,000 |
| Loan Disbursal Date | 3/1/2020 |
| Loan Interest Rate | 15% |
| Bill Payment Date | 4/1/2020 |
| Payment Frequency | Monthly |
| Interest Posting | Yes |
| Interest Posting Frequency | Monthly |
| Term | 20 |
| EMI | $1,136.85 |
Scenario 1: When payment amount > the sum of the repayment schedule amount and the threshold percentage is null
Let's assume that a borrower wants to make a repayment of $5,000 until July 1, 2013. The summation of four EMIs is $1,136.85*4 = $4,547.4. So, the borrower has made excess payment of $452.6 ($5,000 - $4,547.4).
On making the payment of $5,000, the following actions take place on the contract:
As the Excess Threshold % for Reschedule is Null, the extra amount is deposited to the excess.
Four schedules are marked as paid.
Four bills are generated and marked as paid.
Four IPTs of status closed are created, and one IPT of status open with zero amount is created.
One LPT is created and marked as cleared.
The LAD is changed to the 4th-month schedule date, which is July 1, 2013.
On reversing the payment of $5,000, the following actions take place on the contract:
The excess field is set to zero again.
The four schedules are marked unpaid.
All the four generated bills are deleted.
Only one IPT is generated for the first month.
One LPT is created and marked as reversed.
The LAD is reverted to the previous date, which is March 1, 2013.
Scenario 2: When payment amount > the sum of the repayment schedule amount and the threshold percentage is zero
Let's assume that a borrower wants to make a repayment of $5,000 until July 1, 2013. The summation of four EMIs is $1,136.85*4 = $4,547.4. So, the borrower has made excess payment of $452.6 ($5,000 - $4,547.4).
On making the payment of $5,000, the following actions take place on the contract:
As the Excess Threshold % for Reschedule is zero, the extra amount is reduced from the principal remaining and is added to the principal posted.
Four schedules are marked as paid.
Four bills are generated and marked as paid.
Four IPTs of status closed are created, and one IPT of status open with zero amount is created.
One LPT is created and marked as cleared.
The LAD is changed to the 4th-month schedule date, which is July 1, 2013.
On reversing the payment of $5,000, the following actions take place on the contract:
The principal remaining and the principal posted are reverted to the previous value.
The four schedules are marked unpaid.
All the four generated bills are deleted.
Only one IPT is generated for the first month.
One LPT is created and marked as reversed.
The LAD is reverted to the previous date, which is March 1, 2013.
Scenario 3: When payment amount = the sum of the repayment schedule amount and the threshold percentage is either zero or null
Let's assume that a borrower wants to make a repayment until July 1, 2013. The summation of four EMIs is $1,136.85*4 = $4,547.4 and the borrower has made a payment of $4,547.4.
On making the payment of $4,547.4, the following actions take place on the contract:
Four schedules are marked as paid.
Four bills are generated and marked as paid.
Four IPTs of status closed are created, and one IPT of status open with zero amount is created.
One LPT is created and marked as cleared.
The LAD is changed to the 4th-month schedule date, which is July 1, 2013.
On reversing the payment of $4,547.4, the following actions take place on the contract:
The four schedules are marked unpaid.
All the four generated bills are deleted.
Only one IPT is generated for the first month.
One LPT is created and marked as reversed.
The LAD is reverted to the previous date, which is March 1, 2013.
Scenario 4: When payment amount < the sum of the repayment schedule amount and the threshold percentage is either zero or null
Let's assume that a borrower wants to make a repayment until July 1, 2013. The summation of four EMIs is $1,136.85*4 = $4,547.4, but the borrower has made a payment of $4,000.
On making the payment of $4,000, the following actions take place on the contract:
The excess amount of $589.45 ($4,000 - $3,410.55) is paid toward the interest first and then the principal.
As three schedules are paid entirely, those three schedules are marked as paid.
Three bills are generated and marked as paid.
One bill is generated for the excess amount and is marked as not paid.
Three IPTs of status closed are created, and one IPT of status open with zero due amount is created.
One LPT is created and marked as cleared.
The LAD is updated to June 1, 2013.
On reversing the payment of $4,000, the following actions take place on the contract:
The three schedules are marked unpaid.
All the four generated bills are deleted.
Only one IPT is generated for the first month.
One LPT is created and marked as reversed.
The LAD is reverted to the previous date, which is March 1, 2013.