# How to provide floating rates

### **Create loan account - Floating rate**

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 [Global Search.](https://docs.mifos.org/mifosx/user-manual/for-all-users/untitled/global-search) Click the **General** tab.

1. On the Client page, Click **+New Loan** on the bright blue action bar.
2. Select the loan product to base the loan account on from the product list.
3. Complete the [loan account fields](https://docs.mifos.org/mifosx/user-manual/for-operational-users-mifos-x-web-app/accounts-and-transactions/loan-accounts/how-to-create-a-loan-account-application/loan-account-fields), making any modifications from the default that are permitted and applicable to the loan application.
4. 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: 

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/27.png?version=1\&modificationDate=1452750797348\&cacheVersion=1\&api=v2\&width=850)

     5\. Click **Submit**. 

### Viewing Loan Product - Applied Floating Rate 

Go to Loan account page >> Floating Interest Rates

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/28.png?version=1\&modificationDate=1452751332801\&cacheVersion=1\&api=v2\&width=850)

Please find below scenarios and configurations for understanding floating rates better:- 

### **Scenario 1: With Base lending rate**

     a) Floating Rate definition (Admin>>Product>>Floating Rate)

         Base Lending Rate (Checked box) defined as shown in the image below 

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/19.png?version=1\&modificationDate=1452751529822\&cacheVersion=1\&api=v2\&width=700)

  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)** 

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/29.png?version=1\&modificationDate=1452751951424\&cacheVersion=1\&api=v2\&width=700)

  c) Loan Account definition (Client>>New Loan application) 

       In term section - Interest Rate differential - 1%

                                \- Is Floating Rate - Enabled (Checked box)  

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/30.png?version=1\&modificationDate=1452752376732\&cacheVersion=1\&api=v2\&width=700)

   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)]

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/28.png?version=1\&modificationDate=1452751332801\&cacheVersion=1\&api=v2\&width=700)

 Note:- For this scenario **Is Floating Rate** is Enabled (Checked box) at the loan account level. 

### **Scenario 2: Without "Is Floating rate enabled" - 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)]

### **Scenario 3: With "Is differential enabled"** 

        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 

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/20.png?version=1\&modificationDate=1452751530388\&cacheVersion=1\&api=v2\&width=786)

 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)] 

### **Scenario 4: Without - Base lending and Is differential**     

         a) Floating Rate definition (Admin>>Product>>Floating Rate)

          \- Base Lending Rate (Unchecked boxed),

          \- Is differential (Unchecked box) defined as shown in the image below

![](https://mifosforge.jira.com/wiki/download/thumbnails/111673399/21.png?version=1\&modificationDate=1452751531043\&cacheVersion=1\&api=v2\&width=700)

   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)] 

Related articles

* Page:[Enabling Floating Rate](https://docs.mifos.org/mifosx/user-manual/for-administrators-mifos-x-platform/administration/products/loan-products/loan-product-fields/enabling-floating-rate)
* Page:[Loan Products](https://docs.mifos.org/mifosx/user-manual/for-administrators-mifos-x-platform/administration/products/loan-products)
* Page:[Loan with term vary based on loan cycle](https://docs.mifos.org/mifosx/user-manual/for-operational-users-mifos-x-web-app/accounts-and-transactions/loan-accounts/loan-with-term-vary-based-on-loan-cycle)
* Page:[Tranche loan process](https://docs.mifos.org/mifosx/user-manual/for-operational-users-mifos-x-web-app/accounts-and-transactions/loan-accounts/tranche-loan-process)
* Page:[How to create new loan - Interest Recalculation](https://docs.mifos.org/mifosx/user-manual/for-operational-users-mifos-x-web-app/accounts-and-transactions/loan-accounts/how-to-create-new-loan-interest-recalculation)