Fixed Loan Account Type Setup

Fixed Loan Account Type Setup

Purpose

The Fixed Loan Account Type details setup will specify the calculation rules, Transaction Types and General Ledger codes that are used to post control transactions on the Fixed Loan Account. 

Access

  1. Account | Edit/View Account Types |  | Account Type Details dialog |   

Dialog Details


Details Specific Fields

Field
Explanation
Lending Option

Drop down to select the appropriate product type:
  1. Consumer Loan – Loans subject to NZ CCCFA legislation. This option also shows the principal/interest split on each instalment posting
  2. Future Ledger Interest – Loans subject to Australian Consumer Credit code compliance. This option enables the future ledger interest profile on the fixed loan account so interest may be charged on a daily 365 calculation
  3. GST – Allows GST to be entered to the finance tab and charged on instalment posting
  4. Other – All other standard P&I loans 
Cost Items 1-15
The Cost items on the Fixed Loan Control Details

Transaction Types may be selected here for an individual cost item if required, if left blank, the control details Transaction Type is used

Example:
  1. There are two Account Types setup – one for Business Loans and one for Consumer Loans
  2. The interest earned for each Account Type is required to be reported separately in the General Ledger. Therefore a Transaction Type (with a unique GL Code) would be nominated to Cost 11 (Interest) for the Account Type
  3. This will override the Transaction Type selected to the Control record
Note:
  1. The Cost item field names shown in the example above (Cash Price – Interest) are unique to each organisation and your field names may vary from those in the pictured dialog
  2. Only Cost items with field names and descriptions are displayed here
Interest Charged Tran Type
This field is only enabled for the Lending Option ‘Future Ledger Interest’

[F2] to highlight and  the Transaction Type used for charging interest for the future ledger

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Future
  2. Control Input: Control 
  3. GL Code: Interest Income
  4. Post Interest: Charged
  5. Year End Reporting: None
Interest Rebate Tran Type
[F2] to highlight and  the Transaction Type used for interest rebate when early terminating a loan

Note: This Transaction Type MUST be unique for each Account Type

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. GL Code: Unearned Interest GL Code for this Account Type
  4. Post Interest & Year End Reporting: None
Creditor Loss Tran Type
Only required if a Creditors loss will be charged on Early Termination

[F2] to highlight and  the Transaction Type used for posting a Creditors loss transaction when early terminating a loan

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. Post Interest & Year End Reporting: None
Insurance Premium Rebate Tran Type
Only required if Financed Insurance is provided

[F2] to highlight and   the Transaction Type to be used to post the Early Termination Insurance Premium Rebate amount

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. Post Interest & Year End Reporting: None
If this Transaction Type is not selected the Insurance Premium Rebate field will be disabled.
Insurance Commission Rebate Tran Type
Only required if Financed Insurance is provided and commission is earned on the Insurance

[F2] to highlight and  the Transaction Type to be used to post the Early Termination Insurance Commission amount

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. Post Interest & Year End Reporting: None
If this Transaction Type is not selected the Insurance Commission Rebate field on the Early Termination dialog will be disabled
Early Term Fee Tran Type
Only Required if an Early Termination fee will be charged

[F2] to highlight and  the Transaction Type to be used to post the Early Termination fee

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. Post Interest & Year End Reporting: None
If this Transaction Type is not selected, then the Early Termination dialog fee field will be disabled, and the transaction will not post
Write Off Tran Type
[F2] to highlight and  the Transaction Type to be used to post the Early Termination Write Off Principal amount 

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. GL Code: Bad Debts Written off
  4. Post Interest & Year End Reporting: None
If this Transaction Type is not selected the Early Termination Write Off field will be disabled
Interest Write Off
This field is only enabled for the Lending Option ‘Future Ledger Interest’

[F2] to highlight and  the Transaction Type is used for write off of interest when early terminating a loan

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. GL Code: Interest Income or a separate Interest write off code
  4. Post Interest & Year End Reporting: None
Default Interest Write Off Tran Type
[F2] to highlight and  the Transaction Type to be used to post the Early Termination Write Off Interest amount 

The selected Transaction Type must have the below fields setup as:
  1. Ledger: Current
  2. Control Input: Control 
  3. Post Interest & Year End Reporting: None
  4. Extra Charge: Checked ON
If this Transaction Type is not selected the Early Termination Write Off Default Interest field will be disabled

It will adjust the arrears balance, but have no effect on accrued interest
Dealer Commission Clawback Tran Type
Only required if Dealer commissions are paid and the commission is to be recovered if the loan early terminates

[F2] to highlight and  the Transaction Type to be used to post the Early Termination Dealer Commission Clawback amount

The selected Transaction Type must have the below fields setup as:
  1. Module: Dealer
  2. Ledger: Current
  3. Control Input: Control 
  4. Post Interest & Year End Reporting: None
Rebate Default Percentage
A percentage may be entered here to decrease the proportion of interest rebated

Entering 0.00 or 100.00 means the total interest rebate calculated on early termination will be applied

Entering any other percentage (eg. 75.00) would result in the client only receiving 75% of the calculated interest rebate 
Early Term. Fee Method
No longer used
Early Term. Fee Matrix
Only required if a matrix calculation is applied in establishing the amount of the Early Termination Fee

[F2] and  the appropriate matrix to apply
Early Term. Pre-Payment Fee
A separate fee may be charged for early pre-payment
Cost Index for Tax on Interest
No longer used
Expose Principal Interest Profile
This only displays when the lending option is set to Future Ledger Interest

If ticked then the Principal Interest Profile is able to be changed on the loan

If unticked then the Principal Interest Profile is a read only field
Early Term. Admin Fee
Prepopulates the Early Termination dialog with a standard fee
Do not add fee within x days of Maturity
Will make the Early Termination Fee 0.00 if the account is being terminated within the specified number of days from its end date
Creditor Loss Calculation Method

Safe Harbour (NZ)
The CCCF Act’s regulations set out a “safe harbour” formula for a lender to calculate a full prepayment charge. Provided lenders use this formula correctly, then any fee they charge as a result is treated as being a reasonable estimate of their loss

Early Repayment Loss

Formula is ERL = (FI * (BR-COF)/BR)/2

Where FI = Interest Rebate at time of termination
BR = APR on the loan being terminated
COF = borrowing rate
Early Term. Days’ Notice Period
Enter a value here in days

When an ET quote is undertaken the system will work out what the daily interest charge is from the Early Termination Date out for the specified number of days taking into account any instalments that may post in that time
First Payment Missed Letter
[F2] to highlight and  the Communication Type required for this letter
First Override Letter
[F2] to highlight and  the Communication Type required for this letter
Charge Second Client Letter Fees
Check this flag on when sending overdue letters to both the main client and the second client should attract a fee for each letter
Combined Ledger Interest
This field is only enabled for the Lending Option ‘Future Ledger Interest’

When this is checked on, the interest calculation is applied as follows:
  1. Interest is accrued using the interest rate associated with the Principal interest profile on a daily account balance basis combining both the future ledger and current ledger transactions to build up daily balance.
When this is checked off, the interest is calculated as:
  1. Interest is accrued using the interest rate associated with the Principal interest profile on a daily account balance basis for the future ledger only
Post Net Receivable Instalments to Investors
No longer used
Direct Debit Communication Type
[F2] to highlight and  the Communication Type to be used for the  process on the Direct Debit Details dialog
Fixed Loan Unearned Interest BS
[F2] to  the General Ledger Code that the Unearned Interest will post to

This GL code must be unique
Fixed Loan Interest Income
[F2] to  the General Ledger Code that the Earned Interest will post to
Investors Unrealised Interest BS
[F2] to  the General Ledger Code that the Investors Unearned Interest will post to
Investors Interest Expense
[F2] to  the General Ledger Code that the Investors Earned Interest will post to
Unearned Interest
Select the required interest calculation  method


Interest Rebate Indicator
Select the required interest rebate calculation method


Dealer Insurance Rebate Indicator
If Dealer Insurance will be rebated, then select the Rule of 78 calculation method, otherwise leave as none


Dealer Unearned Interest BS
No longer used
Dealer Unearned Interest PL
No longer used
Dealer Unrealised Expense  BS
No longer used
Dealer Unrealised Expense  PL
No longer used
Unpaid Item Transaction Type
[F2] to highlight and  a Transaction Type that will be used to automatically code unpaid items  when they are imported to the Cashbook

The selected Transaction Type would usually have the below fields setup as:
  1. Ledger: Current
  2. Control: Cashbook Input
  3. Post Interest & Year End Reporting: None
  4. Show Transaction On Statement: Checked On
  5. Post Last Receipt: Checked On
The ‘Other Transaction’ section will also usually be completed with a Transaction Type and Amount to charge a fee for the dishonour

E.g.


Unpaid Item Dishonour Codes
[F2] to  the Dishonour Code group to be applied to this Account Type
Discount Trans Type
This only displays when the lending option is set to Future Ledger Interest

[F2] to  the Transaction Type for the Rebate on an Early Termination
Default Discount Rate
This only displays when the lending option is set to Future Ledger Interest

Enter the Default Discount Rate used to calculate the rebate on an Early Termination

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