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Overview
- This feature allows a user to
Background and strategic fit
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If the user enters an amount for either principal or installment amount, then the other will be automatically calculated by Mifos.
The user may specify variable installments in 3 scenarios:
1) Flat Interest Rate
2) Interest based on Diminishing Balance
3) Interest based on Diminishing Balance with Interest Recalculation
Scenario 1: Flat Interest Rate: Mifos will not recompute interest for each installment. And the total interest will remain the same as it was when the original schedule was generated.
User alters dates: Date cannot be before previous installment date or after the next installment date. The new date is accepted. No other change.
User alters principal amount: This amount can be zero. The amount is accepted. The installment amount is calculated by Mifos as "Installment Interest" + the principal amount specified . The difference in amount (between newly specified principal and original principal for the installment) will be equally distributed among other installments principal that were not modified.
User alters installment amount: Amount can be zero too.If the amount specified is greater than the interest, then the principal amount is calculated by Mifos as installment amount specified minus the "Installment Interest". If the amount specified is less than the interest amount for the installment, then the interest is set to this value. The difference in principal amount or interest amount (between newly specified amount and original amount for the installment for both interest and principal) will be equally distributed among other installments (principal and interest) that were not modified.
Scenario 2 and 3: Interest based on Diminishing balance (without or with interest recalculation)
User modifies dates: Date cannot be before previous installment date or after the next installment date. The new date is accepted. The interest on the installments that follow the modified installment will be recalculated based on principal outstanding and number of days of each installment.
User modifies principal amount: This amount can be zero. The amount is accepted. The difference in principal amount (between newly specified amount and original amount for the installment) will be equally distributed among other installments' principals that were not modified.The interest on the installments that follow the modified installment will be recalculated based on principal outstanding and number of days of each installment.
User alters installment amount: Amount can be zero too.If the amount specified is greater than the interest, then the principal amount is calculated by Mifos as installment amount specified minus the "Installment Interest". If the amount specified is less than the interest amount for the installment, then the interest is set to this value and the difference in interest is either added to the next installment (if compounding is turned off) or added to principal if compounded is turned on for this loan product. The interest on the installments that follow the modified installment will be recalculated based on principal outstanding and number of days of each installment.
The interest recalculation will be based on the relevant configuration of the loan product as specified at: Interest Amount Recalculation for Loan Accounts
Attributes
For Loan Products
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