In this section, we will cover the essential details required to make loan repayment.
Loan repayment involves paying the principal amount along with the accrued interest within or on the loan's maturity date. Repayment is made based on the set repayment schedule until the loan is fully paid off.
Additionally, a loan strategy is added during the loan account creation, which determines the repayment approach. For instance, the chosen strategy could involve following a specific order, such as Penalties, Fees, Interest, and Principal, when collecting payments. The loan will be collected according to the set loan strategy.
Loan customers have the flexibility to make partial payments (installments) or pay the full loan amount.
During loan account creation, you can set standing instructions at disbursement( add link). In this process, repayment will be automatically deducted from a linked savings account based on the loan repayment schedule. The standing instruction schedule is set to match the loan repayment schedule.
For example, if the repayment schedule is set to the 12th of every month. On 12 of every month, the loan repayment will be automatically deducted from the linked savings account. The repayment amount is usually predetermined and based on the loan amount, interest rate, and repayment period. Any additional fees or penalties associated with the loan are also deducted from the same savings account according to the terms of the loan agreement.
The transfer from the savings account to the loan account takes place based on the schedule defined in the standing instruction.
Only users with assigned roles and permission can process loan repayment.
For loan repayment to be automatically processed, there must be sufficient balance in the customer’s savings account, else the repayment will fail.
Once the loan repayment has been completed, the loan status changes for “Active” to “Closed (Obligations Met)"
To make manual loan repayment
On the loan page,
- On the Active loan account, click on the Take Action button
- Select “Make Repayment” from the modal list.
- Select payment method. We recommend using “Link savings account” as the payment method. Selecting this option will enable journal entries to be automatically recorded.
- Enter the required information and click the Next button to process repayment.
Updated about 2 months ago