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Loan Products
Loan products define the templates for lending — interest models, repayment schedules, fee structures, and GL posting rules that apply to all loan accounts created under that product.
Navigation: Administration → Products → Loan Products
What Is a Loan Product?
A loan product is a configuration template. When a loan account is created, it inherits its behaviour from the product. Examples:
| Product | Interest Model | Repayment | Term |
|---|---|---|---|
| Personal Loan | Reducing balance, 18% p.a. | Monthly | 12–36 months |
| Agricultural Loan | Flat rate, 12% p.a. | Quarterly | 6–24 months |
| Emergency Loan | Flat rate, 24% p.a. | Monthly | 1–6 months |
| Business Loan | Reducing balance, 20% p.a. | Monthly | 12–60 months |
Loan Product Table
| Column | Description |
|---|---|
| Product Name | Descriptive name |
| Product Code | Unique identifier |
| Interest Type | Flat or reducing balance |
| Interest Rate | Annual interest rate |
| Min/Max Amount | Loan amount range |
| Min/Max Term | Loan term range (months) |
| Status | Active or inactive |
| Approval Status | Draft, pending, or approved |
Creating a Loan Product
- Click Create Loan Product
- Fill in the product details:
Basic Information
| Field | Description | Required |
|---|---|---|
| Product Name | Descriptive name | Yes |
| Product Code | Unique code | Yes |
| Description | What this product is for | No |
| Currency | Product currency | Yes |
Interest Configuration
| Field | Description |
|---|---|
| Interest Type | FLAT or REDUCING_BALANCE |
| Interest Rate | Annual percentage rate |
| Interest Calculation Method | How daily interest is calculated |
| Compounding Frequency | Daily, monthly, quarterly, annually |
Repayment Configuration
| Field | Description |
|---|---|
| Repayment Type | HORIZONTAL (equal instalments) or VERTICAL |
| Repayment Frequency | Monthly, quarterly, weekly |
| Grace Period | Number of periods before first repayment |
| Max Arrears Days | Days overdue before arrears flag |
Limits
| Field | Description |
|---|---|
| Minimum Amount | Smallest loan allowed |
| Maximum Amount | Largest loan allowed |
| Minimum Term | Shortest term (months) |
| Maximum Term | Longest term (months) |
GL Posting Rule Bindings
After creating the product, bind GL posting rules for each operation:
| Operation | Required |
|---|---|
| Disbursement | Yes |
| Cash Repayment | Yes (at least one repayment type) |
| Bank Repayment | Optional |
| Interest Accrual | Yes |
| Fee Charge | If fees are configured |
| Penalty | If penalties are configured |
| Write-off | Optional |
See GL Posting Rules for details on creating and binding rules.
Pricing Profile
Attach a pricing profile to define fees:
- Processing fee
- Origination fee
- Insurance premium
- Late payment penalty
Interest Models
Flat Rate
Interest is calculated on the original principal for the entire loan term:
Total Interest = Principal × Rate × Term (in years)
Monthly Interest = Total Interest ÷ Number of PaymentsReducing Balance
Interest is calculated on the outstanding balance each period:
Monthly Interest = Outstanding Balance × (Annual Rate ÷ 12)As the principal is repaid, interest decreases each month.
Next Steps
- Deposit Products — Configure deposit account types
- Loan Accounts — Create loan accounts using these products