1.8.6 Repayment Type

You must specify the type of repayment schedule as amortized, capitalized or normal, while defining a product. The type you have specified will be applicable to all the contracts involving the product and will be displayed in the Contract On-line Preferences screen. You can capitalize the interest payment on a contract by:

• Specifying the type of schedule (through the Product Preferences screen) as Capitalized. The contract inherits this from the product
• Specifying the frequency for the capitalization through the Product Default Schedules screen

If you have specified capitalization and defined schedules for the components of the contract, the unpaid interest will be capitalized for the next schedule. That is, the unpaid interest will be added to the unpaid principal and this will become the principal, for the next schedule.

Note:

Capitalization is done only for the ‘Main’ interest and only if it is a fixed interest of the bearing type.

You can have equated installments for the contract on the schedule dates by specifying Amortization as the schedule type and specifying the frequency. These repayment schedules will be drawn up taking into consideration the Principal and the Main Interest (that component which you have defined for display in the Contract Details screen). If you specify amortized schedules, the system will automatically do the amortization, according to the frequency defined.

Note:

The schedule type can be amortized only if the amount has a fixed type of interest and bearing interest payment method.

If you specify the schedule type as Normal, you can tailor schedules for the various components to suit your needs. A schedule date:

• Should be later than or the same as the Value Date
• You can have only one schedule, for a component for a date
• It cannot be beyond the Maturity Date