Creating a Loan Account

A loan account is a fully functional account that records details of a customer’s loan, including the loan amount, interest rate, repayment schedule, and other loan information.

All loan accounts are instances of a loan product to which they are associated or linked to. The loan products define the rules, settings, and limits of all loan accounts under the specific loan product.

For example, when setting a loan repayment for a loan account, the repayment must be within the set repayment range (min-max) of the associated loan product. In the student loan product, the loan repayment range is set to a min of 10 and a max of 15. A loan account under the student loan product must have its repayment within 10-15.

This implies that the settings of a new loan account will be governed by the terms that were established in the loan product. However, not entirely there are certain fields that can be modified or unique to a loan account.

Creating a loan

Follow these steps to create a customer loan account:

  1. On the console, navigate to Business section > Clients > Loan.

  2. Click on the New Loan button on the right-side of the screen.

  3. Enter the required fields:

Product name

Select a loan product to be linked to the loan account. The loan product will define the settings of the loan account.

Loan Officer

Select a loan officer. The loan officer is in charge of loan disbursement, approval or rejection, and other loan configurations of the specific loan. The loan officer must already exist the before the loan creation.

Date submitted and disbursed

The date submitted is automatically set. However, the loan officer can edit the date and select a different date for loan creation. Also, select a date for loan payout (disbursement). Note that the dates selected must be within the start and close date of the loan product.

Link account

Select an account to be linked to the loan application. The amount disbursed will be sent to this account, also repayment will be made from the connected account.

Create Standing Instructions At Disbursement:

Standing instructions at loan disbursement refer to a set of automated processes established between your organization and the loan customer at the time of loan disbursement. These instructions ensure that loan repayments are made on time and automatically deducted from the borrower's bank account.

Click the checkbox to create standing instructions.



Account details of the loan account must fit within the range set in the linked loan product

Account details


Enter the total amount to be loaned out excluding interest and charges.

Loan Term

The loan term is the length of time over which a loan agreement is repaid. The loan term can be set in days, weeks, months, or years.


Number Of Repayment

The number of repayments refers to the number of payments times allowed before the loan is fully repaid. For example, where the number of repayments is set to 10, the customer is expected to repay not more than 10 repayments.

Repaid every

The "repaid every" refers to the duration at which the borrower makes payments for loan repayment. Select either a daily, weekly, monthly, or yearly repayment duration.

First Repayment

Select a date for the first loan repayment. The loan repayment will be automatically processed on the selected first repayment date.

Repayment Charged From

Select a date the repayment will be charged from.

Repayment Strategy

Select a repayment strategy or plan for the loan repayment. The loan repayment will be done according to the selected repayment strategy. For example, where the selected strategy is “Principal, Interest, Penalties, and Free order” the loan repayment will begin from the principal amount → interest → penalties → free order.


Nominal Interest Rate

This is the percentage increase in the amount to be paid. The nominal interest rate is automatically set to a monthly interest rate.

Interest method

The interest method refers to the way in which interest is calculated and charged on the loan.

These methods include:

  • Flat: Also known as Fixed flat. Under this interest method, the interest is charged on the original principal amount of the loan only, and not on the accumulated interest.

  • Declining Balance: Under this method, the interest is charged on the remaining loan balance, which declines over time as payments are made. In other words, this method calculates interest based on the balance owed that is owed rather that the total amount. This method of interest calculation is also known as decreasing balance or reducing.

Interest Calculation Period

Select an interest calculation period.

Calculate Interest For Exact Days In Partial Period

In an instance where the loan is paid early or before the expiration of the loan term. In this instance, the loan interest will be calculated differently than it would have been in a full loan term.

Select either “Yes” or “No” if you want to enable this setting.

Arrears Tolerance

(Optional numeric field) The arrears tolerance is set to default from the linked loan product. However, a loan officer can select a different arrears tolerance amount for the loan account.

Interest Free Period

(Optional numeric field) The interest free period is set by default from the linked loan product. However, a loan officer can select a different interest free period for the loan account.


Loan amortization calculates the repayment amounts for repayment of the loan over a specified period of time consisting of the principal amount and the interest. The amount paid periodically changes over time until the loan is fully paid off at the end of the loan period.

The amortization is set by default from the linked loan product.


Select a Moratorium period on both principal and interest payments. Throughout this period, loan repayment is temporarily paused.

The Moratorium is set to default from the linked loan product.


Loan Charges

Loan charges are added to a loan product when created which is to be applicable to all loan accounts added to the specific loan product. Select a charge from the charge list or click on the Add Charge button to add more charges to the loan product.

Note that, the charges must already be defined or created in the charges.

Overdue Charges

Overdue charges are also added to the loan products. Select a charge from the charge list or click on the Add Charge button to add more overdue charges to the loan product.

Similar to loan charges, overdue charges must already be defined in the charges section. The overdue charges are created by selecting Overdue charges in the Charge Time Type section.

  • Click on Next to preview the Loan account. Go through the preview to verify that the preview is error-free.
  • Click on the submit button to create the loan application.

The goal of every loan account is the approval and subsequent disbursement of loans, however prior to loan approval, i.e while the loan is still pending, the loan account can be modified.

Your financial institution may allow some of the inherited information to be modified for a loan account depending on how the loan product is defined.