Suspend/resume interest
LoanPro has many tools for changing and adjusting interest rates on installment loans or line of credit accounts. This article will cover: Interest Rate Change, Interest adjustment, Line of Credit Interest Rate adjustments and Suspend/Resume Interest. These tools enable lenders to change the interest rate on a loan going forward or adjust the amount of interest that is due for a specific payment period. These are typically used for things like SCRA or hardship adjustments, but can be used for any reason.
Feature functions:
- Interest Rate Change: changes the interest rate for the account from the time of the change to the end of the loan (unless it is changed again).
- Interest Adjustment: edits the amount of interest that is due at the time of payment
- Line of Credit Interest Rate Adjustment: the interest rate can be changed on each individual bucket from the date of the change onward.
- Suspend/Resume Interest: Stop the accrual of interest on a loan until you choose to resume.
Interest Rate Change
To create a new interest rate change, open the account you want to work on. Navigate to Account Setup > Setup Tools.
On the Setup Tools page, click the menu next to ‘Advance/Credit’. Then select ‘Interest Rate Change’.
On this page, you will see a history of any interest changes that have already been made on the account. To create a new adjustment, click ‘Add’. A window will appear where you'll enter information about the interest rate change.
| Description | A text field where you can describe the reason for changing the interest rate. |
| Interest rate | The new interest rate. Note that the interest rate frequency (annual, monthly, etc.) will remain the same setting that's found in the account's Setup Terms. |
| Adjustment date |
Fixed: Manually input your desired interest rate. Variable: Pull interest rate from one of your saved Variable Interest Indexes
|
| Apply date | This is the date on which the interest rate will change. The apply date will be included in interest accrual moving forward. (Note that if you're using the Between Periods interest application method, the change will take effect on the first day of the period where the apply date falls.) |
When you are finished, click ‘Save’. The change will now be reflected on the Interest Rate Change page.
Will this affect an account's APR? Yes. Interest Rate Changes will alter the account’s APR, but you won't see it change as part of your account setup terms. The effect of the new calculation, however, will still take place. We recommend checking the consistency between the interest rate changes and your account contracts. If you want to change the APR completely in the account terms, you'll need to inactivate the account, change the APR, and re-calculate your account terms.
Do interest rate changes override schedule rolls? Yes. If a schedule roll has been set on the account, when the apply date for an Interest Rate Change arrives, the rate specified by the Interest Rate Change will be the one the loan calculator uses. If a new schedule line then applies, the rate specified by the Interest Rate Change will still be used.
Interest Adjustment transactions
An Interest Adjustment on an installment loan will influence the interest accrual and how much interest is due at the time of payment. The adjustment tool has two types: interest increase and interest decrease.
To make adjustments, navigate to the account you'd like to adjust and click Account Setup > Setup Tools > Interest Adjustments.
To create a new adjustment, click ‘Add’. A window will appear where you can input the following information:
- Title: allows you to name your adjustment for easier reference later
- Type: allows you to either increase due interest or decrease due interest
- Adjustment Amount: the amount of interest being adjusted
- Date: the date on which the interest adjustment applies
- Category: select categories to organize interest adjustments. You can create custom categories by navigating to Settings > Loan > Labeling > Interest Adjustment Categories. Interest Adjustment Categories are useful for labeling different interest adjustment situations and standardizing your adjustment practices with your team.
After finalizing the adjustment settings, click 'Save' to log the adjustment. Your adjustment will now show up on the Interest Adjustments page where you can view each transaction.
Like other types of transactions, you can also view your interest adjustment transaction history under the Reports tab. Simply navigate to Reports > Transaction History > and select Interest Adjustment History.
Suspend/Resume Interest Accrual
This tool can be used to stop interest accrual at any point in the loan. Interest will not accrue until the software is told to resume. This can be done manually or automatically with the Automation Engine.
This tool is only available if the loan is activated.
How to Suspend and Resume Interest
There are three ways to suspend or resume interest:
- Using Setup Tools
- From with Loan Settings
- With Automation Engine
Setup Tools
To suspend or resume interest accrual on an account, navigate to Account Setup > Setup Tools > Suspend/Resume Interest inside of an individual account.
Next, click 'Add'. A window will display and allow you to select a 'Type' and 'Date'. Select whether you want to create a 'Suspend Interest Accrual' or a 'Resume Interest Accrual' from the 'Type' drop-down. Then, enter the date that interest should stop or resume accruing on the account. Click 'Save' to save your settings.
If you try to set a Suspend Interest date in the past, you will receive a warning prompt. Read through the warning, and if you still wish to stop the interest accrual, click 'Proceed'.
Loan Settings
In Loan Settings, you have the option to add a closed date, repossession date, or liquidation date. When you set any of these dates, you'll see a checkbox to Stop Interest Accrual. Checking this box will suspend interest starting on that date, just like if you'd suspended it from the setup tools page.
If interest is already suspended on that date, you won't be able to set it. Clicking ‘Interest Dates’ to the right pulls up a list of all the current suspend dates on the account.
When everything looks how you'd like, click 'Save'.
Automation Engine
You can also start and stop the accrual of interest using rules found in Automation Engine. To do so, navigate to Automation Engine > Stop Interest Date within the account to see what rules will change the accrual of interest. You can force the evaluation (and possible change of interest accrual) by clicking the three-dot options button for the rule and then selecting 'Force Rule'.
You can change your tenant-level rules applied settings for interest accrual in Settings > Loan > Automation Engine > Stop Interest Date.
Once you have saved your interest accrual setting with any of those methods, it will be viewable on the Suspend/Resume Interest page. On this page, you can edit or delete your accrual settings by clicking the buttons on the right.
If I suspend interest but later delete that suspension, will the account retroactively accrue interest for the period when it was suspended? Yes. Whereas resuming interest would just restart interest from that day forward, deleting the original suspension will make it like interest was never suspended in the first place.
Line of Credit - Interest Rate Adjustments
Within a line of credit account, interest adjustments can be made to individual buckets which will change the interest rate going forward.
To change the interest rate for a bucket, open the line of credit account and navigate to Tools > Interest Rate Adjustment. This page will display any adjustments that have already been made.
To create an adjustment, click ‘Add Adjustment’. A window will appear where you can input the following information:
- Info: any description or information you’d like to add about the adjustment.
- Bucket: select which bucket you’d like to adjust
- Date: the date when the adjustment will take place
- New Rate: input the desired interest rate for this bucket
When you’re done filling in the information, click ‘Save’.
Line of credit accounts do not have a suspend/resume interest feature. If you would like to stop interest accrual on an account, use the adjustment feature to set the desired bucket(s) to 0% interest.
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