The Advanced Configuration section of the Setup Terms tab inside of each loan lets you select important settings for your loan. These settings control things like interest accrual, accounting for discount, payment period length, and much more. These settings are often difficult to understand. This article will give a brief overview of each setting and a link to more in-depth information on each setting.
Loan Type – This option lets you choose the loan type: Credit Limit, Flooring, Installment, or Lease.
Loan Category – This option lets you choose the category of the loan: Automobile, Real Estate, Consumer, or Other.
Calculation Type – This option lets you specify the method to be used for calculating the interest portion of each payment.
Accounting-Discount Split – This option lets you choose whether or not to split the principal portion of payments into principal and discount portions. The amount of principal that is considered discount for each payment will be determined by the Discount Calculation selection.
Discount Calculation – This option lets you specify how the discount portion of each payment should be calculated.
Days In Year – This option lets you choose between accruing interest based on the actual number of days in a year or based on a year composed of uniform payment periods.
First Period Days – This option lets you choose how the system deals with an irregular first payment period.
Interest Application – This option lets you choose how interest comes due on a loan.
Beg/End – This option lets you choose whether payments should come due at the beginning or end of a payment period. (The most common choice is End.)
Last As Final – This option lets you choose whether or not the last scheduled payment will remain the last payment (should there be any extra interest accrued on the loan). If you choose “Yes,” any extra interest accrued on the loan (due to late or missing payments, interest bearing fees, or escrow) will be added to the last scheduled payment. If you choose “No,” any extra interest accrued on the loan will be scheduled into additional payments (beyond the originally scheduled last payment).
Round – This option lets you choose how many decimal places numbers get rounded to while doing loan calculations.
Schedule Round – This option lets you enter an amount that will be subtracted from the final payment. This is typically used to match a payment schedule from a contract that came from another system. This amount will be subtracted first from the Interest portion of the final payment, then from the principal portion.
First Day Interest – This option lets you choose whether to charge interest on the contract date. (The most common choice is Yes.)
Suspend/Resume Interest – This option lets you choose whether to stop interest accrual when the date of the originally-calculated final payment has passed. If you do not select this option, interest will continue to accrue on the account after the original loan expiration date (if the loan is extended due to missing or late payments, etc.)
Curtailment Date Template – This option lets you choose from the Curtailment Date Templates you have created.
Roll Schedule Template – This option lets you choose from templates you’ve created that customize the payment schedule.
Fees Paid By – This option lets you choose how payments will apply to fees on the loan.
Payment Date Application – This option lets you choose if payments will apply based on the application date, or if they will apply based on the payment schedule.
Due on Business Days – This option lets you choose whether payments should only come due on business days and what to do about it if they don’t naturally fall on a business day. The options include:
- Disabled – Payments can come due on non-business days.
- Add Days – Payments should come due only on business days. If a payment would naturally fall on a non-business day, move the due date to the next business day.
- Subtract Days – Payments should come due only on business days. If a payment would naturally fall on a non-business day, move the due date to the previous business day.
NDD Calculation – This option lets you choose how the next due date on the loan will be calculated (only available when Interest Application is set to Between Transactions).
You will usually make the same selections on these options for all your loans, or for a type of loan that you give. All of these options can be defaulted in the Settings > Defaults > New Loan > Loan Type Specific area of LoanPro. You can also set up preconfigured loans that will let you choose your settings and other loan items and then easily create loans with the correct settings and information.