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. 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 loan account fields, 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.
Viewing Loan Product - Applied Floating Rate
Go to Loan account page >> Floating Interest Rates
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
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.
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
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
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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