The Terms Of A Loan Are Stored On A Service Agreement

Loans are initiated by creating a loan service agreement for a customer. The loan service agreement (and its SA Type) contains the loan's terms:

• The loan amount is held in the service agreement's Total Amount to Bill.
• The customer's periodic payment amount is held in the service agreement's Recurring Charge Amount.
• The number of amortization periods (e.g., 36 months, 240 months, etc.) is held in the service agreement's Number of Payment Periods.
• If the interest rate is the same for all customers with this type of loan service agreement, the interest rate is defined on the service agreement's SA type (using a bill factor). A specific interest rate can be defaulted from a start option contract value. If a specific interest rate applies to the customer, the SA type's interest rate can be overridden by specifying a bill factor value on the customer's service agreement (where the bill factor value contains the specific interest rate for the customer).
• The SA type controls the periodicity of the bills (e.g., monthly or bi-weekly).

Because a loan is defined using a service agreement, the typical functionality that is controlled by the service agreement's SA type is supported, including:

• How and when it is billed.
• How payments are booked in the GL (and the payment priority relative to other service agreements).
• How its debt is monitored by credit and collections.
• How late payment charges are calculated.

Loan service agreements are created using Start/Stop just like all other service agreements. The start/stop transaction has special loan functionality that allows an operator to specify the service agreement-specific loan terms described above. A start option can be specified to override the SA type's interest bill factor.