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Interest Rate Change Threshold Overpayment

Overview​

The PMT Adjustment Threshold manages overpayments and interest rate changes in relation to upcoming instalments. If an overpayment or interest rate change occurs within a predefined number of days (X days) before an installment date, the recalculation of the next installment will be deferred. The adjustment will be applied to the subsequent instalment (n+1), preventing last-minute changes to the upcoming payment.

pmt adjustment threshold

Feature Description​

The PMT Adjustment Threshold uses a configurable threshold period. Changes occurring within this period will not impact the next scheduled installment. Adjustments made outside this threshold will result in an update to the next installment, providing sufficient time to notify customers of the changes.

This functionality enhances the customer experience by providing adequate notice of installment changes due to overpayments or interest rate modifications. If the threshold feature is not configured, the system will follow the existing process, recalculating and updating the current installment as necessary.

Key Considerations​

  • No user interface (UI) changes are associated with this functionality.
  • The feature leverages the PMT Threshold functionality and adheres to the existing overpayment calculation rules.
  • It is automatically enabled if the PMT Threshold feature is activated at the product or account level.
  • This functionality ensures greater transparency and predictability in loan repayment schedules while minimizing unexpected adjustments for customers.