Optimized Payments for Declining Balance Equal Installments Loans
  • 15 Feb 2022
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Optimized Payments for Declining Balance Equal Installments Loans

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Warning!

As of January 2022, this feature is no longer supported or offered to new customers, and this documentation is maintained for archival purposes only. If you are using this feature, we recommend you plan to discontinue doing so when possible.

We will continue to make necessary or critical bug fixes, and for now, we will continue to support it for customers who were onboarded with this feature as of December 2021.

Optimized payments are a type of payment for declining balance equal installments loans. For more information, see Payment Methods for Declining Balance Equal Installments Loans.

Please Note

This method of payment is only available for Dynamic Term loan products with Fixed Interest Rate and No Taxes.

Loans with large differences in the number of days between payments have equal installment dues, but the last installment is usually adjusted with the difference that comes from the irregular payment intervals, in some cases this makes it considerably larger than the rest.

Mambu has an option for equal installments loans, named “Optimized Payments”. If there is a large difference in the final installment amount to pay down the loan, it will be redistributed across all other installments to create a more consistent repayment schedule. To accomplish this, the schedule is created in three steps:

  1. The standard schedule is calculated.
  2. The difference between the installments is redistributed on the remaining installments.
  3. The deviation per installment using the standard interpolation method is reduced.

Example

The following is an example with a comparison between the Standard and Optimized Payments methods.
comparison between the Standard Payments and the Optimized Payments methods

The optimized payments steps are applied when creating or activating an account and will be reapplied when any changes are made to the schedule due dates or the number of installments.


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