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Definitions

General loan terms

Lender - an organisation that is lending money.

Borrower - a party that is borrowing money. The borrower can be a private individual or a business organisation.

Loan - a particular amount of money the borrower borrows from a lender with the agreement to pay it back, usually with interest.

Principal - the initial amount paid by the lender to the borrower. And the remaining amount of the loan debt after the repayments.

Interest - the price that the borrower pays for borrowing the loan.

Penalty - the fees that can be applied if the borrower does not meet the obligations set in the loan contract.

Payment holiday - the arrangement with the lender that allows the borrower to make no repayments during the agreed period.

Loans classification

Umbrella loan or umbrella credit facility - a type of loan that provides a borrower with a larger credit limit, allowing for the issuance of multiple smaller loans within a single larger limit.

Unsecured - when there is no valuable item that secures loan repayments.

Secured - when the borrower pledges some valuable item, collateral, to secure loan repayments.

Loan flow terms

Loan product - the specific set of loan features, such as interest rates, repayment periods, and eligibility criteria, a lender offers for granting loans.

Loan application - is a process when a borrower applies for a loan, and a lender processes the loan application and evaluates the risks.

Loan offer - is the process when the lender calculates the main financial parameters of the loan, presents them, and negotiates them with the borrower.

Loan contract - is the process of creating a loan contract based on the conditions of the accepted loan offer. Loan contracts are created automatically when the loan offer is accepted.

Loan disbursement - is the process when the lender pays the agreed-upon amount into the borrower’s account, which becomes available for use.

Loan repayment - is the process when the borrower makes loan repayments according to the repayment schedule.

Secured loans terms

Asset - a valuable item that a lender can use to recover obligations set in the loan contract if a borrower cannot repay a loan. Some examples of an asset: real estate, vehicles, etc.

Collateral - an asset that is connected to the loan contract.

Pledge - is a collateral held by a lender in return for lending funds. Once the loan is paid off the lender transfers the pledged asset back to the borrower.

Pledgee - a party receiving the collateral and providing the loan, usually a lender. Pledger - a borrower, an individual or organisation providing a collateral, usually a borrower.

Suretyship - is an agreement in which a third party, a guarantor, who takes a financial responsibility for the debt if the borrower cannot pay for the loan. Liabilities - an arrangement that specifies the financial responsibility of the pledge towards the pledged collateral.

About loan

This guide provides instructions on configuring and managing loans using the Tuum BackOffice interface.

Here you will find information about the following topics:

Loan product
Loan flow
Loan application
Loan offer
Loan contract
Loan contracts portfolio report
Loan repayments with direct debit
Assets and collaterals
Loan privileges

Loan flow

In the Tuum environment, there are two options of how the loan flow might function:

  • Standard flow,

  • Umbrella flow.

Standard flow

The standard loan flow embodies activities for granting and repaying a loan based on a single loan product.

Loan application and/or offer steps are optional and can be omitted if your company manages loan applications and/or offers outside of the Tuum system.

Umbrella flow

The umbrella loan flow involves the creation of an umbrella loan product that sets a total umbrella credit limit. It allows for the creation of multiple sub-contracts based on a single loan product. Issuing each sub-contract reduces the total umbrella loan limit, while repayment of the principal restores it.

To begin granting loans through the standard or umbrella flow, define your loan products.