10.7.3.4 Absolute Payment Patterns

Absolute payment patterns are commonly used for instruments that pay on a seasonal schedule, such as agricultural or construction loans that require special payment handling based on months or seasons.

Take the example of a loan that follows a seasonal payment pattern, in which the payment patterns for January, February, and March are scheduled for interest-only payments. As revenues for the customer increase, the payment amount also increases. Therefore, the payments for April and May are 80% of the original payment, and June through September is 100% of the original payment. The payment decreases as the production season slows. The payment for October is decreased to 80% of the original payment, and the payments for November and December are decreased again to 50% of the original payment.

Note:

You can define absolute payment patterns only for up to a year. This is because all entries are automatically ordered by date and are scheduled in a single year rotation.