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Configuring an Equal Installment Interest-Only Loan

To set up a product with equal interest-only installments, select Product Type: Interest Only Equal Installments Loan. Equal installment interest only loan product type

For more information, see Setting Up New Loan Products.

This loan type has the following settings that should be configured:

Interest Rate section​

Interest rate settings section

  • Accrue Late Interest: This toggle allows or disallows the accrual of interest on amounts that are in arrears. This option should be enabled for interest to accrue on amounts that are in arrears. When the Accrue Late Interest checkbox is enabled, the Decouple Interest from Arrears checkbox will also become visible. For more details on this feature, refer to Accrue late interest.
  • Allow Adjustable Interest Rates: An Adjustable Interest Rate Loan, also known as a variable rate loan, is a type of loan where the interest rate applied varies over time. The rate changes are typically tied to a specific benchmark or index, which reflects prevailing market rates. Mambu supports interest-only loans with configurable adjustable interest rates. These rates can be set as fixed, indexed, or a combination of both.
  • PMT Adjustment Threshold: The payment due (also called total due) adjustment threshold determines whether the total due of the current installment is adjusted after an interest rate change or an overpayment. If the time interval between the interest rate change and the due installment is greater than the specified threshold, the total due is recalculated to reflect the new interest rate. Otherwise, the total due remains unchanged.
    • The threshold days method can be configured as calendar days or working days count. threshold days method

Repayment Scheduling section​

Repayment Scheduling section

  • Payment Interval Method: Supports the options to pay with either Interval or Fixed Days of Month. The current product does not support a grace period or other rounding options except for rounding of the repayment currency.

Repayment Collection section​

Repayment Collection section

Arrears settings​

For more information, see Arrears Settings.

Non-configurable settings​

This product type has some default settings that cannot be changed. They are visible but non-editable in the loan product create and edit forms:

  • Interest type: Simple interest
  • Calculate interest using: Principal and Interest
  • Prepayment allocation: On upcoming pending installment only
  • Prepayment recalculation method: Reduce Amount per Installment
  • Apply interest on prepayment: Manual
  • Accrued interest posting frequency: On repayment
  • Payment allocation method: Horizontal