How to view and edit penalty calculations on your loans

Penalty calculations help you manage loans more effectively by encouraging borrowers to repay on time and follow the agreed terms. Lenders usually apply these penalties when borrowers miss payments, delay repayment, or violate other terms of the loan agreement. With the Penalty Calculation feature, you can view a detailed breakdown of all penalties linked to a customer’s loan. Additionally, you can edit penalties attached to approved loans. If any incorrect penalty fees were added, you can easily update them to reflect the correct amounts.

Definition of terms in penalty calculations

Each penalty comes with specific settings that determine how it’s applied:

Name: The name of the penalty. It assigns a clear, identifiable label to the penalty so you can easily recognize it.
Amount: The fixed amount of the penalty. It applies a fixed penalty charge, regardless of the loan size.
Percentage: The percentage of the applicable amount that contributes to the penalty. Calculates the penalty based on a specific percentage of the applicable amount.
Applicable to: This determines whether the penalty applies only to the principal or to both principal and interest.
Minimum amount: The minimum amount of penalty that can be charged. This sets the lowest possible penalty that can be charged, providing a floor.
Maximum amount: It caps the penalty, ensuring it doesn’t exceed a certain amount, even for larger loans.
Grace period: The number of days after the due date before a penalty is applied. Adds a buffer period (in days) after the due date before the penalty kicks in.
Frequency: This specifies how often the penalty gets applied; daily, weekly, or otherwise.