Paying Off a Loan

When you pay off a loan, you make a prepayment that covers the whole amount due as of a given date, when the client wants to fully pay their loan earlier than initially agreed and thus close their loan account. It is also sometimes called "early settlement" or "early closure" of a loan account.

To pay off a loan, you need to have the Pay Off Loan Accounts (PAY_OFF_LOAN) permission. If you want to waive or reduce some of the interest or fees that are due, then the Apply Loan Adjustments (APPLY_LOAN_ADJUSTMENTS) permission will be required in addition to the Pay Off Loan Accounts permission.

To pay off a loan, on the right-hand side of the account overview page, select Close > Pay Off.

If you don't waive any of the amounts due, when paying off a loan, there will be a repayment transaction logged for the remaining balances (principal + interest + fees + penalty, if applicable).

When paying off a loan, the sequence of events happening in the back-end is the following:

• Any future interest (not yet due or pre-paid) will be ignored or not considered due and will not be included in the amount to be paid to close the account
• A repayment transaction is logged for the total amount paid
• The account is automatically closed (with all obligations met)

Preview payoff for a future date

To preview the balances of a loan in case of a payoff on a future date:

1. Open the loan account.
2. On the right-hand side of the screen, select Close > Pay Off.
3. In the Pay Off Loan dialog, select the Future date option in the Value Date (Entry Date) field.
4. The payoff amount for the date you selected will be displayed.

To preview all the balances of the loan on a particular day, select the future date from the calendar. The system will automatically calculate the balance for that day.

The balances are calculated as per below example:

• Principal balance: USD9000

• Interest balance: USD90.07 = USD82.85 (today interest balance) + USD7.22 (future interest for X days, starting from tomorrow)

• Fee balance: USD280 = USD280 (today fee balance) + USD0 (future fees during X days, starting from tomorrow)

• Penalty balance: USD472.73 = USD354.55 (today penalty balance) + USD118.18 (future penalty during X days, starting from tomorrow)

• Total payoff balance: USD9842.80 = USD9000 + USD90.07 + USD280 + USD472.73