Late fees
LoanPro provides users the option to configure automatic late fees for your company. These are fees that are automatically assessed on your accounts once the determined grace period has passed. There are several ways to configure late fees. You can,
- Set late fee defaults according to loan category and type.
- Set late fees for individual accounts.
- Turn late fees on or off according to status.
This article will explain how to set automatic late fees up and when late fees are charged.
Setting late fee defaults
To set the defaults for late fees,
- Navigate to Settings > Defaults > New Loan > Loan Type Specific inside your company account.
- You can choose to set separate defaults based on the loan category (automobile, consumer, real estate, other) and type (installment, credit limit, flooring, lease). Choose the loan category and type that you want and click 'Edit'.
Navigate to the late fee configuration area and choose which late fee options your accounts will start out with. The available options are:
| Setting | Description | Available Options |
| Late fee type | This selection lets you choose one of three ways for late fees to be assessed. |
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| Grace period (days) | This is the number of days after a payment comes due before a late fee can be assessed. As an example, suppose you choose 5, and a payment comes due on the 1st of the month. If the customer pays on or before the 6th of the month, no late fee will be assessed. |
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| Late fee | Here you can specify the amount of the late fee. |
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| Late fee percentage base |
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| Buckets added to late fee percentage base | To add an escrow bucket to the percentage base, click in the field. This should bring up a list of your escrow buckets. You can type in the field to filter escrow buckets by keyword. When you select an escrow bucket, it will stay in the field until you click the "X" icon. You can re-click the field to search for and add as many buckets as you want. |
- Once you have entered your preferred default information, click to 'Save'.
If you'd like the late fee to be a percentage of the payment amount, just calculate that amount and include it as a flat fee.
Setting late fees on an individual account
The default late fee settings may not suffice in every situation. If you need to customize the settings for a specific account, you can do so in Account Setup > Setup Terms > Late Fee Configuration in a loan account. The options shown here are the same as they are when setting the defaults.
If the loan has already been activated, it will be easier to make adjustments to the late fee settings in Account Setup > Setup Tools > Late Fees in a loan account. Please note that this tool is not available if the loan has not been activated. The options here are the same as the options when setting the defaults. Once you have made the necessary changes, click 'Save & Calculate'.
Late fees by status
You may also choose to only want accounts in certain statuses to have late fees assessed on them. LoanPro lets you select whether late fees should be turned on or off for certain statuses. To do this, navigate to Settings > Loan > Charges > Late Fee By Status.
You can choose the late fee application by selecting 'Standard' from the ‘Default Late Fee Application’ setting in the top left corner. The following options are available:
- Standard: Late fees will come due as soon as they are posted to the account. A standard fee will add to the account’s ‘Amount Past Due’ balance. The customer will be aware that there was a fee added to the account and that they need to pay the fee to come current.
- Payoff only: Late fees will only be due with the loan payoff. A payoff only fee will only increase the loan’s payoff amount. Note that when making a payoff fee, you’ll need a payment waterfall application that applies payments towards them. To do so, you can create your own custom waterfall application or you can apply a custom payment application on an individual payment basis while logging a payment.
You can also choose whether these late fees should be included in past due calculations.
Below, there's a table of all the loan statuses in your tenant. On the left side of the table, you'll see the ID and name of each status. To the right, you'll see rules that can limit late fees for a certain status. Then, you'll see a Yes or No specifying if each status is currently active. (You can set a loan status as active/inactive by going to Settings > Loan > Labeling > Loan Status.) The final column contains toggle switches for each sub-status, allowing you to choose if late fees should be assessed for accounts in that status. is a toggle button that allows you to enroll that specific status to have late fees assessed or not.
Adding a rule
If you wish to make the enrollment more specific, you have the ability to add a rule to the loan status. For example, if you want loans with an 'Active - Current Loan' status and that have an amount past due greater than 30 to be enrolled to receive late fees.
- Click the button on the right side of the fee to turn the enrollment on. Then you would click on the ‘Empty’ button under the 'Rule' column.
- This will bring up the formula editor box. You can choose to load an existing rule or create your own rule.
- Validate the rule and then save it.
For more information regarding rules and rule creation, you can view our article on Clojure.
When late fees will be charged
Late fees will be assessed during the daily maintenance process. The late fee will be charged on the loan when the days past due equal the grace period number. So if the loan is only 1 payment past due by 5 days (DPD = 5), and the grace period is also 5, then the late fee will be charged on that day.
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