12.1.1 Specifying the Unearned Interest Calculation Parameters
For normal loans, you would calculate and collect the interest amount at the same time (for example every month in case of monthly repayment schedules). However, for installment loans, you can specify different frequencies for calculation and payment of the main interest component.
Therefore, as part of processing Annual Rest Loans, Oracle Lending first calculates the unearned interest amount (this interest amount is unearned as you are calculating the interest for a future tenor). Subsequently, the system allocates the interest amount to the payment schedules that you specify for the loan.
These are the steps involved in specifying the calculation parameters for the unearned
interest amount:
- Indicating the preferences and schedules for the unearned interest amount at the product level,
- Specifying the unearned interest calculation parameters for an Annual Rest loan contract. The unearned calculation parameters defined at the product level is defaulted to the contracts associated with it. However, Oracle Lending allows you to modify the values of the parameters at the time of contract processing.
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