Create a Schedule Roll

Introduction

Most lending software will calculate a loan repayment schedule in the simplest way possible. It usually works something like what we show in our Amortized Loan Overview article: a typical repayment schedule has uniform payments and a single interest rate that applies in every payment period. Sometimes, though, a lender needs more flexibility in their amortization schedules. This includes the option to change the payment amount or the interest rate in a specific payment period. The schedule roll makes this possible. In this article, we will explain in more depth what a schedule roll is and how to create a new schedule roll in LMS.

What is a Schedule Roll?

Roll schedule (verb) and schedule roll (noun) are terms used in LoanPro to describe a change to the calculated payment schedule on a loan. Custom payment schedules are created one line at a time.

A schedule roll lets you change the payment schedule from payment period to payment period. This is achieved by entering lines that will include the number of payments the line will apply to, the interest rate, and a payment amount for those lines. You also have the option to enter a principal balance that the loan should be at when the payments in the schedule line are made. If you enter a balance, the schedule line will calculate the payment amount that will get the principal balance there.

The loan will likely not be at the exact principal balance you enter, but it will be close. This is due, in part, to the necessity of dealing with dollars and cents (2 decimal places) for final calculated numbers.

Creating a new Schedule Roll

To create a new schedule roll in LMS, navigate within a specific loan to Account Setup > Setup Terms. This area is used to set up the loan. In the 'Summary' section at the bottom of this page, you will see five blue advanced options. Clicking 'Schedule Tools' will display a drop-down with the options of 'Roll Schedule', 'Force', and 'Round'. Select 'Roll Schedule' to create a new schedule.

Create a Schedule Line

Selecting 'Roll Schedule' will open the transactions history page. On this page, click 'New Schedule Line' in the top right of the screen. You can create as many schedule lines as you need to customize the schedule.

For each schedule line, enter a minimum of the Term, Annual Interest Rate, and Payment Amount.

Explanation of Schedule Line Fields

Field

Description

Term

This is the number of payment periods for which the rest of the settings for this current schedule line will apply.

Rate

This is the interest rate that will apply over the term for this schedule line.

Solve Using

This option works in conjunction with the Amount field and will let you choose how the payment amount will be calculated for the payments in this schedule line. The options are:

  • Payment – If this option is selected, you will see the Type and Force Balloon Payment drop-downs. Your selection from the Type drop-down will help determine how the payments are calculated.
  • Balance – This option will let you solve for payment based on what the balance should be after the payments in this line are made. For example, if you choose balance and then enter $0.00, the payments will be calculated to be whatever they have to be so that the loan will be paid off (have a $0.00 balance) after the Term of this schedule line. This works similarly to the smooth advance tool, that solves for payment using an iterative method to get as close to the payment amount that will cause the principal balance to hit the target amount as it can.

Amount/Percent/Payment Calculation Terms

This field works in conjunction with the "Solve Using" field and the Type. Here you enter the balance, payment amount, or number of payment periods depending on your Solve Using and type selections.

Type

This option is only available if you choose Payment from the Solve Using drop-down. Your selection here can change the Amount/Percent/Payment Calc Terms field.

  • Advanced Schedule – Choosing this option will set the Amount/Percent/Payment Calc Terms field to Payment Calc Terms. This option will let you enter a number of payment periods into the Payment Calc Terms field. The number entered will become the remaining number of payments on the loan and the loan will be taken to a $0.00 balance after these payments
  • Dollar Amount – This will set the Amount/Percent/Payment Calc field to Amount. Here you can enter the dollar amount for the payments in this schedule line.
  • Interest Only – If this option is selected, the Amount/Percent/Payment field will no longer appear. Payments will be set to the amount of interest that accrues in a payment period. These payments won’t pay any principal.
  • Interest Only Plus – This option will set the Amount/Percent/Payment Calc field to Amount. The payment amount will be the amount of interest that accrues in a payment period plus the amount you enter into the Amount field.
  • % of Remaining Balance -This option will set the Amount/Percent/Payment Calc field to Percentage. This will calculate payments so that after the payments are made, the principal balance will equal the percentage of the remaining principal balance you entered into the Percentage field.
  • % of Principal – This works just like % of Remaining Principal Balance, except the balance after the payments will be a percentage of the original principal balance instead of the remaining principal balance.
  • % of Principal + Underwriting – This works just like % of Remaining Principal Balance, except the balance after the payments will be a percentage of the original principal balance plus underwriting fee instead of the remaining principal balance.

Force Balloon Payment

This option lets you choose to force a balloon payment on the loan after the schedule line. This will mean that the next payment after the schedule line is completed will cover the entire outstanding amount on the loan at that point.

Enter as many schedule lines as you need to complete your payment schedule.

If you don’t enter enough schedule lines to cover the term of the loan, the payment schedule in the last schedule line will continue until the loan reaches a $0 principal balance. You can also set the 'Last as Final' drop-down to 'Yes' to choose to make the last payment for the final schedule line grow or shrink to accommodate late or missed payments so that it will truly be the last payment.

Once you have entered all the schedule lines you want for your Schedule Roll, click Save.

Example

Let’s say that you want to give a 12-month loan with a 3-month introductory interest rate of 5%; but after the first 3 months, the interest rate will be 15%. A schedule roll can accomplish this. To create the schedule roll in this example, navigate to Account Setup > Setup Terms inside a specific loan.

Click 'Schedule Tools' and choose 'Roll Schedule'.

Now, click 'New Schedule Line' to add the first new schedule line. Enter 3 for the term, since the introductory interest rate will last for 3 months. Then, enter 5 for the rate as the introductory 5% interest rate. Lastly, solve using Payment.

Select 'Advanced Schedule' from the 'Type' drop-down. This will change the 'Amount' field label to 'Payment Calculation Term'.

Since we want to calculate a payment amount that will pay off the loan in 12 payments, enter 12 into this field.

The term entered as the Payment Calculation Term does not have to match the term entered for the loan.

Click Save to save the schedule line.

Since payments in this first line have a 5% interest rate, they will be of a lower amount than payments in periods where 15% interest accrues.

Now, click 'New Schedule Line' to enter the second schedule line.

For the second schedule line, enter a term of 9 since there will be 12 periods in this loan and 3 of them will be taken up by the first schedule line. Enter 15 as the Annual Interest Rate.

Now, instead of solving for payment, we will solve for a balance of $0. Choose 'Balance' from the 'Solve Using' drop-down.

Enter 0 in the 'Balance' field to solve for a $0 balance.

Click Save to save the schedule line.

Common Uses and Customer Questions

Lenders generally use the schedule roll feature to increase the flexibility of their loan products. They may choose to start a loan with a promotional interest rate or a lower payment amount. A lender may also want to solve for specific balance during the loan. For example, if a lender wants the borrower to have paid off one-third of the principal after the first 3 payments, they can solve for a balance that is two-thirds of the initial principal amount.

Can I use the schedule roll to match an unusual contract? Usually, yes. If you have a contract with changing payment amounts, the schedule roll is one feature that can get you close to matching a contract. You may also want to change the loan calculation settings, or use the change due date feature.

Can payment amounts change automatically during the loan term either based on payments that have been made or the outstanding principal balance? No. Dynamic payment amounts is a feature that is typically referred to as payment recasting, and LMS does not support it.


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