Set up annuity repayment type contract

Hello all,

I need to set up annuity contract with fixed repayment amount, but with the interest portion of the repayment based on the outstanding principal.

How can I achieve this configuration

If your query is on LD Module, then

In the Loan Screen,
1. ANNUITY.PAY.METHOD needs to be set as 'BEGIN' or 'END' (Normally it'll END always), to define a "Annuity" contract
2. AUTO.SCH - NO
3. DEFINE.SCH - Y

In the Schedule Screen,
Just One Schedule row, with repay date, type as "A", fixed Repayment amount and the frequency.

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If you don't know the repayment amount and want T24 to give you the amount, enter any smaller amount in the REPAY.AMT field of the Schedule screen; on validating system will throw an warning saying that the "Repayment Amount" should be minimum "xxx" much.

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Hello Saran,

I appreciate the feedback. What I have achieved by setting up annuity, is it the same as having the interest calculated on outstanding principal? If not, what do I need to do to have a reducing balance interest calculation where the interest for each schedule is based on the outstanding principal and not on the initial principal. And with this in mind, can I still have equal repayment amounts for each schedule ie. the amount repaid is equal for every schedule, and therefore the need to increase or decrease the principal/interest portion of the repayment?

Thanks.

Interest will be calculated on the O/S amount only (I don't know, if that is a global setup or configurable).

In case of annuity, IN will keep on decreasing every month, as this will be calculated on your O/S Principal. For Ex: If your Fixed Repayment is 1000 monthly, 650 will b ur PR comp and 350 will be ur IN comp. Next month the IN will be slightly less, as it is calculated on the new O/S amount (Reducing bal int calc) which might be say 655 PR & 345 IN.

Try creating a Loan in your test env, as i've mentioned in my earlier post. Then check the schedule created for the same and you will understand.