Paying-off a Loan
  • 18 Jun 2020
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Paying-off a Loan

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Paying off a Loan Account

A Pay Off is 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, go to Close > Pay-off .

When paying-off a loan, all principal, interest, fees and penalties balance will be paid. Users who have the permission to "Apply Loan Adjustments" will also be able to reduce or completely waive interest, fees or penalties by changing the amounts to be paid.

To pay-off a loan, the user needs to have both permissions to "Pay-Off Loan Accounts" and "Enter Repayments".If you want to waive or reduce some of the interest or fees that are due, then the "Apply Loan Adjustments" permission will be required in addition to the first two.

Pay Off Loan pop-up with Principal Balance, Interest Balance, Penalty Balance, Pay Off Account, Channel, Repayment and Notes fields. Available buttons are Cancel and 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, i.e. 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, i.e. not considered due and not 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)
Please Note
A pay-off action cannot currently be fully undone, the account can be reopened and the repayment transaction can be manually reverted, but the interest, fees and penalty reductions would remain in place.
Please Note
When paying-off a dynamic loan, the interest balance and penalties balance also contains the accrued interest and penalties. So when closing the account, Mambu will apply the interest and penalties until the current date unless the user subtracts the accrued amounts from the balance.

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