What: When the product is setup with “On Upcoming Pending Installment Only” prepayment allocation, either Reduce Number of Installments or Reduce Amount per Installment pre-payment recalculation, add an option to allocate the prepaid amount to the outstanding principal balance and recalculate all installments (according to the recalculation option) without marking the “current” installment as Paid.
Allow choosing if accrued interest should be covered by the repayment, i.e. Apply Interest on Pre-Payment options: Automatic or Manual.
Please find an example in the file attached.
Why: Some organizations allow their clients to make pre-payments to either reduce the term of the loan or the amount expected with each installment, however, these prepayments are treated outside of the agreed schedule and they would still expect the client to pay/ trigger the direct debit on each due date, including the “current” installment.
Currently, when the prepayment recalculation method is to Reduce Amount per Installment, if there are 2 prepayments within the same period, the “current” and next installments are marked as Paid. This translates into “payment holidays” that are not per the agreed schedule or the prepayment recalculation method.