Line-of-Credit Loan Information |
  
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Navigation: Loans > Loan Screens > Account Information Screen Group > Consumer Line-of-Credit Screen >
Line-of-Credit Loan Information |
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Any interest calculation method can be used in processing line-of-credit (LOC) loans on a daily simple interest basis or on a periodic simple interest basis, which include 365/365, 360/360, and 365/360. The daily simple interest loans collect all interest due to the date each payment is collected; the periodic simple interest loans collect interest from the last due date to the current due date. Additionally, payments can be made interest only or interest plus a principal constant.
Note that an afterhours transaction is available which automatically converts LOC accounts to interest-bearing at the end of the draw period or when the credit limit has been met. For more information about this transaction, see Tran Code 2741-02 in the GOLDTeller manual.
Provisions are included within payment method 5 to charge interest (finance charge) or accrue it. Rates on LOC loans can be fixed (not adjustable) or rate sensitive by using the appropriate rate pointer and allowing the rate on the loan to roll based on the effective date placed in the rate table for the defined rate pointer each time the index changes.
Payment Method 5 can be used for a wide variety of loan types, including:
•Revolving lines
•Interest-only loans
•Interest-only loans with a principal constant
•Loans secured by a deposit account
•Overdraft protection loans for a checking account
•Credit card loans
•Dealer flooring loan
Payment Method 5 has been designed with the flexibility to handle a variety of options. Many of the fields on the Loans > Account Information > Consumer Line-of-Credit screen are used for a specific purpose and do not need to be filled in unless the loan uses that specific option. Therefore, as you set up an LOC, make sure the proper fields for the loan type are filled. The fields on the Consumer Line-of-Credit screen allow you to use and mix the features below to define the required functions for the loan:
•Allow checks to clear directly against a loan.
•Calculate interest on the high, low, or actual daily balance for the billing period.
•Calculate the interest from due date to due date or from date of payment to date of payment.
•The loan payment can be automatically drafted from a savings or checking account.
•Interest can be billed independently from the principal.
•Payments can be fixed or variable based on interest calculated with or without minimums.
•The loan can automatically be drafted to cover withdrawals from a checking account.
•The loan and a savings account can work together limiting the balance on each to stay within the percentages established.
•Additional service charges as desired when requested.
•An overdraft can be advanced from either the same loan for which the payment is being posted or from another account.
•You can have an option set that will prevent a line-of-credit loan from auto-paying. If Institution Option RJOF is enabled, the system will not use overdraft funds to make automatic loan payments. The system will use the payable instead of the available balance on the deposit account for determining sufficient funds for making automatic loan payments.
For more information about how LOC loans function, see the following help pages:
Paying a Loan to Zero Without Closing the Account