Ideas for the Mambu Banking Engine

 

Option for "Rounding of repayment schedules" to allocate differences on first installment Merged

What:

Add an option for Loan Products under "Rounding of repayment schedules" to allocate differences on the first installment.

For declining balance equal installment loans this would result in schedules in which the first installment is different than the rest to account for any irregular installment durations, all the remaining installments would be equal. 

Why: 

Some tenant's customers would have an easier understanding of a loan schedule when having a different first installment rather than a different last installment as most differences come from a longer/shorter first installment. Knowing the first installment is different and then having an equal subsequent payment amount is easier to follow for them vs remembering that the last installment is different months in advance. Moreover, when the last installment is particularly inflated tenants might not be able to pay that amount or challenge it.

  • Rodrigo Ocampo
  • Nov 16 2017
  • Nick Nicolaou commented
    November 16, 2017 15:22

    When allocating differences to the first repayment, I would want the repayment amount of the first instalment to be such that the principal outstanding would be identical regardless of the difference in days between disbursement and first instalment, if the loan were repaid on time. This may necessitate for the last repayment to remain a balancing figure and not identical to all other instalments but would be very close.  Essentially the first repayment is the same as the regular instalment adjusted for the difference in daily interest applied as a result of a difference in the first repayment date compared with a disbursement date exactly one month later; and the final repayment accounting for any difference subsequent to that point.

  • Nick Nicolaou commented
    November 16, 2017 15:24

    Attached Excel sheet calculates what the first repayment and regular repayment should be.  The final repayment would be a balancing figure that would be the same or almost the same as the regular instalment.

  • John Peters commented
    November 17, 2017 10:44

    It is very important for our organisation that we are able to generate repayment schedules for loan products to ensure that the first repayment is reflective of the time passing between disbursement date and the first repayment date and prevent a potentially drastically over or undersized repayment at the end.

  • Admin
    Monica Branzan commented
    November 17, 2017 11:02

    Hi Nick and John,

    thanks for sharing your input on this feature with us. For the time being, this feature is not planned on the Mambu roadmap, but please note that whenever this will be picked up for development, the idea will change it's status to "Planned". 

    All the best,

    Monica

  • Andrew Austwick commented
    December 01, 2017 15:55

    It is of high importance to our organisation to provide transparency and be able to demonstrate to our customers that we are charging and collecting the correct level of debit interest accrued monthly on the loans we provide. At the moment, we are unable to do this via the "default" Mambu product settings. Hence, this fix being requested, in order to collect debit interest in sync with when it is actually incurred.