How to provide floating rates
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To create a loan account application for a client
To create a loan account application for a client, select the client by searching the desired client from Click the General tab.
On the Client page, Click +New Loan on the bright blue action bar.
Select the loan product to base the loan account on from the product list.
Complete the , making any modifications from the default that are permitted and applicable to the loan application.
Update required fields - a) Interest rate differential - Provide interest rate here. b) Is Floating Rate - Check the check box to enable floating interest rate. - If unchecked, the disbursement interest rate will be applied and will remain same throughout the installment. Refer the example below:
5. Click Submit.
Go to Loan account page >> Floating Interest Rates
Please find below scenarios and configurations for understanding floating rates better:-
a) Floating Rate definition (Admin>>Product>>Floating Rate)
Base Lending Rate (Checked box) defined as shown in the image below
b) Loan Product definition (Admin>>Product>>Loan Product)
In the term section - Selected Floating rate is Base lending rate
- Differential Rate is 2% (Product level)
c) Loan Account definition (Client>>New Loan application)
In term section - Interest Rate differential - 1%
- Is Floating Rate - Enabled (Checked box)
d) In the loan account page >> Floating interest rates
As you could see for the interest rate, i.e
July 2,2015 - 13% = [10(Base interest rate) +2(Loan product level) +1(Loan account level)]
Aug 2,2015 - 14% = [11(Base interest rate) +2(Loan product level) +1(Loan account level)]
Sep 2,2015 - 15% = [12(Base interest rate) +2(Loan product level) +1(Loan account level)]
Note:- For this scenario Is Floating Rate is Enabled (Checked box) at the loan account level.
Is Floating Rate - Disabled (Unchecked box) then, if the loan was disbursed on July 5th, 2015 then interest rate would be without floating rate.
Like shown below:
July 2,2015 - 13% = [10(Base interest rate) +2(Loan product level) +1(Loan account level)]
Aug 2,2015 - 13% = [10(Base interest rate) +2(Loan product level) +1(Loan account level)]
Sep 2,2015 - 13% = [10(Base interest rate) +2(Loan product level) +1(Loan account level)]
a) Floating Rate definition (Admin>>Product>>Floating Rate)
- Base Lending Rate (Must be Unchecked boxed),
- Is differential (Checked box) defined as shown in the image below
b) Loan Product definition (Admin>>Product>>Loan Product)
In the term section - Selected Floating rate is Differential rate
- Differential Rate is 2% (Product level)
c) Loan Account definition (Client>>New Loan application)
In term section - Interest Rate differential - 1%
- Is Floating Rate - Enabled (Checked box)
d) In the loan account page >> Floating interest rates
As you could see for the interest rate, i.e
July 2,2015 - 14% = [10(Base interest rate) +1(Differential rate chart) +2(Loan product level) +1(Loan account level)]
Aug 2,2015 - 15% = [10(Base interest rate) +2(Differential rate chart) +2(Loan product level) +1(Loan account level)]
a) Floating Rate definition (Admin>>Product>>Floating Rate)
- Base Lending Rate (Unchecked boxed),
- Is differential (Unchecked box) defined as shown in the image below
b) Loan Product definition (Admin>>Product>>Loan Product)
In the term section - Selected Floating rate is Absolute
- Differential Rate is 2% (Product level)
c) Loan Account definition (Client>>New Loan application)
In term section - Interest Rate differential - 1%
- Is Floating Rate - Enabled (Checked box)
d) In the loan account page >> Floating interest rates
As you could see for the interest rate i.e
July 2,2015 - 13% = [10(Base interest rate) +2(Loan product level) +1(Loan account level)]
Aug 2,2015 - 14% = [10(Base interest rate) +2(Loan product level) +1(Loan account level)]
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