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Table of Contents (Online Help)

Loan Product General Settings

The General Settings screen is used to make overall settings regarding a particular loan product.

How to make Loan Product General Settings.

To make the settings you go to System/Configuration/Loan Product Settings/General Settings. A screen that looks as follows will be seen:

• Product linked to savings?: Tick this check box if you use a percentage of client's savings as a Guarantee for loans. If a particular loan product is not based on savings, remove the check-mark.
• Number of Interest days in a year: By default Loan Performer sets the number of days for calculating interest on savings and loans at 365. You can change the value in the text box in accordance with your organization's policy.
• Number of weeks per year: Here, in relation to the Number of Interest days in a year, specify the corresponding number of weeks in a year. The number of weeks defines how interest should be calculated for weekly, bi-weekly or 4-weekly loans. The default number of weeks for Loan Performer is 52.

For example, if you have a loan repayable in 16 weeks and you calculate this as equivalent to 4 months. Loan Performer by default will calculate 16 out of 52 weeks, which is not the same as 4 out of 12 months. However, if you indicate here that a year has 48 weeks, and then Loan Performer will calculate 16 out of 48 weeks in a year, which is equivalent to 4 out of 12 months

• Currency: Select the currency from the drop-down list, e.g., "UGX". By default, the currency displayed is what was set at the Installation of Loan Performer.
• Recalculation of due dates at disbursement: If the disbursement date is different from the loan application date, then for flat rate loans, Loan Performer prompts you with the following options;
  1. Do not modify due dates: The installment dates are not modified. Loan Performer will calculate the due dates according to what was set at loan application.
  2. Update due dates with the difference between application and disbursement: The installment dates are brought forward by the mentioned difference in the number of days. This option is suitable for loans with short installment periods, e.g. daily, weekly, bi-weekly, four-weekly.
  3. Recalculate due dates based on current disbursement date: This option is suitable for longer installment periods, like monthly loans where the installment date is forwarded by a month.
  4. Recalculate dates and amounts based on disbursement date: Since months don’t always have the same number of days, the interest for loans on declining balance may need to be recalculated.

  Note that recalculation will undo all previous modifications of the loan repayment schedule made earlier.

• Activate to make this item Compulsory: When this option is checked, the recalculation of due dates at disbursements option selected above, will be made compulsory.
• Use Variable Interest Rate for Loans on declining balance: If you tick this option Loan Performer will use the preset interest rates for different periods when calculating interest for loans on declining balance. The varying interest rates for the different periods should be set at Variable Interest Rates.

Note that you will not be able to set the varying interest rates during Loan Application process.

• Generate merge records at Loan Application: Tick this option to generate the merge records at loan application. If activated, Loan Performer will add information to the MergeLns tables during loan application. This feature is used to create loan contracts for your clients.
• Generate merge records at Loan Disbursement: Tick this option to generate the merge records at loan disbursement. If activated, Loan Performer will add information to the MergeLns tables at loan disbursement.
• Never Recalculate Interest at Repayment if Declining Balance: When this option is ticked, Loan Performer will not recalculate interest at entry of a repayment for loans on declining balance.
• Always Recalculate Interest at Repayment if Declining Balance: Loan Performer can be set to always recalculate interest at entry of a repayment for loans on declining balance (whether amortization or discounted). The user cannot change this setting at entry of a repayment.
  • Use declining balance compounded method to calculate interest for loans on declining balance: Tick this option for Loan Performer to compound interest in arrears on a daily basis for loans on declining balance.

• Freeze interest on loans on declining balance with interest calculated in days having arrears of more than 60 days: When this option is checked, the system will stop charging interest after the specified number of days e.g. "60"

• Do not reset unpaid interest after recalculation for declining balance: Unpaid interest is usually reset after recalculation of interest. Click on this option and unpaid interest will not be reset after interest calculation.
• Exclude product from general limitations on application and disbursement if 2nd loan: Tick this option to exclude your loan products from limitations applied to all products at Loans in regard to applying/disbursing a second loan while the client already has outstanding loans.
• Allow Partial disbursement: When this option is checked, it makes it possible for less money than what was applied for to be disbursed to a client.
• User can change overpayment GL account at repayment: Tick this option to be able to change the overpayments GL account at loan repayment. This should have been set at System/Configuration/Loan Product Settings/GL Accounts.
• Activate repayments priority: Principal, Interest and Penalty respectively: Most MFIs are usually interested in recovering their income (Interest, fees or Penalties) first then the capital (Principle) later when a loan payment is made. But when you tick this option Loan Performer will allocate repayment amounts starting with principal (Capital), then interest and finally penalty.

• Note that by default Loan Performer allocates repayments starting with Penalties, Interest and finally Principal.

• Prioritize principle payment for non performing loans (Loans more than XX days in arrears). When this option is activated, all payment for non performing assets / loans in arrears of for instance of more than 60 days will first consider principle.
• Activate the Duplum rule (Interest should not exceed principle outstanding). When the this option is the Duplum rule prohibits compounding of interest that it goes / grows beyond the principle outstanding.
• Postpone loan installment from 26th to 31st of the months to the first working day of the month. When this option is activated, the first loan installments that fall between 26 to 31st of the months will be shifted to the first working day of the next month e.g. from "27/01/2019 to 01/02/2019". See Image below:

• Recalculate interest if flat rate or declining balance if not in days. Recalculation of interest is usually done on loans on declining balance at repayment. This feature allows a user to calculate accrued interest at repayment for both loans on flat and declining rate methods.

Note that to use the option "Recalculate interest if flat rate or declining balance if not in days",
1. You need to have the number of interest days in a year at 360.
2. You also need to have activated the option "Recalculate accrued interest for flat rate loans" under System/Configuration/Accounting/Accounts Settings.

• Disclaimer on loan ledger card: Enter in this field your disclaimer that will appear on the client's loan ledger card e.g. "These loans are managed on third party basis". Disclaimer can be notes/ a note for instance the loans may be managed by the institution on behalf of another and cannot therefore guarantee the accuracy of the data.

Click on the Save button to save the loan product general settings or Close button to exit the menu.

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