When a penalty is applied to a product, the loan contracts are created according to the loan product settings.
Loans > Search > Contracts.
Fill in the search parameters > Search.
Click the Contract number to view the contract details.
On the contract details page, scroll to the Components section.
You can change the loan contract margin by creating a new contract version.
To do that:
Click the New contract version button > Select Change interest rate for the Contract change type.
Enter New margin rate.
Fill in other parameters > Save.
We will review two examples of the contract margin increasing and decreasing. The original values are the following:
Interest margin rate = 8.
Interest rate = margin rate + base rate = 8 + 3.5 = 11.5.
In the first example, we change the interest margin rate to 12:
The interest rate recalculates = 12 + 3.5 = 15.5
The interest penalty (INT_P) value updates = 15.5 As the sum of (penalty margin + penalty base rate) = (5 + 9.5) = 14.5 And 14.5 < 15.5
In the second example, we change the interest margin rate to 6:
The interest rate recalculates = 6 + 3.5 = 9.5
The interest penalty (INT_P) value updates = 14.5 As the sum of (penalty margin + penalty base rate) = (5 + 9.5) = 14.5 > 9.5
in question.
A floating penalty with interest is a method of calculating the penalty rate as the higher of two values - the contract interest rate or penalty margin + penalty base rate.
The sum of penalty margin + penalty base rate defines the floor rate. The penalty rate should be the same as the interest rate but not lower than the floor rate.
The floor rate can be determined by the law. For example, the Bank of Finland publishes the floor rate value every 6 month, or it can be defined by the bank itself.
You can configure the floating penalty with interest for the following parameters:
To add a floating penalty with interest:
Loans > Products > Loan products.
Create a new product.
Scroll to the Principal/Interest conditions/Interest on unused limit/Fees.
Select the Penalty checkbox.
For the Penalty type, select Floating penalty with interest.
When , make sure that the rateApplicationRule is set to INSTANT. This way the Tuum system recalculates all related floating penalty with interest contracts accordingly when the floor rate is changed.
,
,
and .
Before setting up a floating penalty with interest, ensure that the are added to the Tuum system.
Find more information about setting the loan interest conditions parameters in the .
