User Guide: Additional Features > Deferments
NLS Interface
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Deferments

Available in NLS 5.4 and later

Simple interest deferment available in NLS 5.6 and later

Billings on rule of 78, fixed amortizationType of interest method where interest is accrued daily on the amount of principal specified in the amortization schedule. Early or late payments do not affect the accrual. Principal reduction transactions will cause the schedule to re-amortize. The interest is non-compounding and is typically calculated on a 360/360 interest year., and simple interestType of interest method where the loan will always accrue daily on the current principal balance. loans can be deferred so that the accrual for that period becomes 0 (zero) with accruals resuming on the next non-deferred period.

To defer billings, query the loan and select Action > Deferred Paymentclick Deferred Payment. A dialog will appear listing all outstanding billings that can be deferred.

Select the checkbox for the payment number to defer.

Click OK to commit the changes.

Fixed Amortization Loan Rebate Rule


NLS Version: 5.11+ | Before 5.11

For fixed amortization loans, the rebate rule can be configured to include or exclude the deferred payments on payoff.

Go to the advanced options of loan account payment determination dialog (Loan Setup > Payment Period... > Advanced), under Rebate Rule, select the appropriate Deferred Payment option from the drop down list.

None Earned interest is based on the original amortization schedule regardless of any payment deferrals.
Recover Deferred Accrual Earned interest from deferred payments are recovered whether the payoff is made before or after the loan's maturity date.
Recover Deferred Accrual (Disable After Orig Maturity) Earned interest from deferred payments are recovered only when a payoff occurs before the loan's maturity date.

Refund Rule

Refund of Interest; Prepayment in Full Before First Installment Due Date (Texas Rule 83.756)

Select this option to apply the Texas Rule §83.756RULE §83.756 - Refund of Precomputed Interest for Subchapter F Loans; Prepayment in Full Before the First Installment Due Date (a) If the first installment due date is one month or less from the date of the loan, the authorized lender may retain for each elapsed day between the date of the loan and prepayment before the first installment due date, 1/30th of the installment account handling charge that could be retained if the first installment period were one month and the loan was prepaid in full on the first installment due date. All interest in excess of such amount must be refunded or credited to the borrower. (b) If the first installment due date is more than one month from the contract date but less than or equal to one month and 15 days from the contract date, the authorized lender may retain for each elapsed day between the date of the loan and prepayment before the first installment due date, 1/30th of the interest that could be retained if the first installment period were one month and the loan was prepaid in full on the first installment due date up to a maximum of 30 days. All interest in excess of such amount must be refunded or credited to the borrower. (c) To calculate the amount of the refund of unearned interest, an authorized lender must consider any installments that were deferred. Refund of Precomputed Interest for Subchapter F Loans; Prepayment in Full Before the First Installment Due Date.

When a loan is paid off prior to its first due date, any residual amount over 1/30th of the interest that is scheduled to accrue for the entire first period for each day after the origination date is refunded back to the borrower. If this amount is less than what has accrued on the loan, the lender is entitled to accrue additional interest up to this amount resulting in the refund of capitalized interest to the borrower being less.

Example

Loan amount of $1,480 at 44.756% interest with 12 payments using Rule of 78 - Addon interest:

Booked on 8/26/2017 with first due date of 9/26/2017 and paid off on 8/27/2017

a. $3.28741 accrues at end of day on 8/26.
b. If paid off on 8/27, then the entire $3.28741 that already accrued plus all unaccrued pre-compute interest is refunded back to the borrower.
c. They can’t earn interest on the first/origination day when paid off prior to the first due date, so there’s 0 days of interest earned.

Booked on 8/26/2017 with first due date of 9/26/2017 and paid off on 8/29/2017

a. $3.28741 accrues at end of day on 8/26, 8/27, and 8/28.
b. If paid off on 8/29, then only 2 days of interest is earned at $3.397/day (1/30th of total $101.91 for the first period). Since $9.86 of interest has accrued, then $3.07 ($9.86 – $6.79) plus all unaccrued pre-compute interest is refunded back to the borrower.
c. They can’t earn interest on the first/origination day, so there’s 2 days earned, which is 2/30th of total first period interest.

Booked on 8/28/2017 with first due date of 10/1/2017 and paid off on 8/31/2017

a. $2.99735 accrues at end of day on 8/28, 8/29, and 8/30.
b. If paid off on 8/31, then only 2 days of interest is earned at $3.397/day (1/30th of total $101.91 for the first period). Since $8.99 of interest has accrued, then $2.20 ($8.99 – $6.79) plus all unaccrued pre-compute interest is refunded back to the borrower.
c. They can’t earn interest on the first/origination day, so there’s 2 days earned in this example, which is 2/30th of total first period interest.

Refund of All Interest on Payoff Before First Installment Due Date

NLS 5.11 and later

Select this option to refund 100% of the interest if the loan is paid in full prior to the first due date.



Updated: 2018.12.12


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