Interest calculations in foreclosure of loans

[Former Member]

Experts,

Scenario 1:G enerallywhile repaying loan how the interest will be calculated? (For repayment amount only or for whole loan amount)

Example

Loan amount sanctioned on 30.04.2009 =10000

Regular Repayment (starts on May2009) = 2500/month

Interest due = 50 (In IT0045 loan conditions given 6% monthly interest rate

How Rs.50 arraived?

Scenario2: In the case of foreclosure of loan how interest is calculated on general system?

Example

Loan amount sanctioned on 30.04.2009 =10000

Repayment starts on May2009 = 2500/month (50 interest due)

Foreclosure amount on June2009 = 7500 (37.50 interest due)

In this scenario our client have their own way of calculating interest, how to achive that?

i.e we don't want 37.50 as interest during foreclosure but want another amount to be as interest.

Please advise us in this, will be given full Pts

Edited by: SD.SK on Jul 9, 2009 12:51 PM

[Former Member · Accepted solution]

Experts,

Scenario 1:G enerallywhile repaying loan how the interest will be calculated? (For repayment amount only or for whole loan amount)

Example

Loan amount sanctioned on 30.04.2009 =10000

Regular Repayment (starts on May2009) = 2500/month

Interest due = 50 (In IT0045 loan conditions given 6% monthly interest rate

How Rs.50 arraived?

It is arrived thru following way:

Ans: Loan amount(10000)Rt of int(6%)/12 = 50 Interest per month.*

Scenario2: In the case of foreclosure of loan how interest is calculated on general system?

About ur scenario 2 as per my knowledge if you only have some different method of calculation you can handle it thru PCR to th extent possible. That can be told after seeing your full requirment.

I am sure qur gurus will give their advice. I mite be wrong.

Regards,

Neha

[Former Member]

Experts,

Please let me know the solution for my second scenario.

[sikindar_a]

wht is client interest rate at the time of closure does he have any interest rate fixed or anything else pls let me know

[Former Member]

Siki,

At the time of closure he has an Average calculation method of calculating the interest

Example:

Loan amount issued on 30.04.2009 = 100000 outstanding loan = 100000

Repayment starts on 31.05.2009 = 10000 Outstanding loan = 90000 Interest as in IT0045(5%)

Repayment starts on 30.06.2009 = 10000 Outstanding loan = 80000 Interest as in IT0045 (5%)

Foreclosure on 31.07.2009 =80000 outstanding loan =Nil

Interest = Average calculation

= 1000009000080000/3

=90000

=90000*0.05/12

= 375 (Interest During foreclosure)

[sikindar_a]

Senthil

Loan amount 10000 30.04.2009

Repayment amount 2500

Loan balance 8500 as on 01.05.2009

So for closure on 31.05.2009 the interest will be 0.02%

This can be achieved thru stand by creating another loan subtype

But the issue which we have to check here is

In the PCR the loan payment will be issue thru one wage payment form /LOP

And repayment will form another wage type /LRP

Now for this forclosure check if we can use same /LRP without /LOP

Iam not sure abt this but

>can give some more inputs on 100009000080000

[Former Member]

Experts

IS there any other way to do it.Please clarify us.

Edited by: SD.SK on Jul 20, 2009 11:58 AM