A typical payment schedule is one that has similar payments and a single interest rate throughout. You may want to customize the payment schedule on your loan. Often, custom payment schedules are reused for certain types of loans within your company. Creating reusable, custom payment schedules is the purpose of roll schedule templates.
What is a Schedule Roll?
Roll schedule and schedule roll are terms used in LoanPro to describe a change to the calculated payment schedule for a loan. Custom payment schedules are created one line at a time. Each line of a schedule roll lets you input the following:
- Term – This is the number of payment periods for which the rest of the settings for the current schedule line will apply
- Rate – This is the interest rate that will apply over the Term for this schedule line
- Solve Using – This option works in conjunction with the Amount field and will let you choose how the payment amount will be calculated for the payments in this schedule line. The options are:
- Payment – If this option is selected, you will see the Type and Force Balloon Payment drop-downs. Your selection from the Type drop-down will help determine how the payments are calculated.
- Balance – This option will let you solve for payment based on what the balance should be after the payments in this line are made. For example, if you choose balance and then enter $0.00, the payments will be calculated to be whatever they have to be so that the loan will be paid off (have a $0.00 balance) after the Term of this schedule line. This works similarly to the smooth advance tool, where it solves for payment using an iterative method to get as close to the payment amount that will cause the principal balance to hit the target amount as it can.
- Amount/Percent/Payment Calc Terms – This field works in conjunction with the Solve Using field and the Type . Here you enter the balance, payment amount, or number of payment periods depending on your Solve Using and type selections.
- Type – This option is only available if you choose Payment from the Solve Using drop-down. Your selection here can change the Amount/Percent/Payment Calc Terms field.
- Advanced Schedule – Choosing this option will set the Amount/Percent/Payment Calc Terms field to Payment Calc Terms. This option will let you enter a number of payment periods into the Payment Calc Terms field. The number entered will become the remaining number of payments on the loan and the loan will be taken to a $0.00 balance after these payments
- Dollar Amount – This will set the Amount/Percent/Payment Calc field to Amount. Here you can enter the dollar amount for the payments in this schedule line.
- Interest Only – If this option is selected, the Amount/Percent/Payment field will no longer appear. Payments will be set to the amount of interest that accrues in a payment period. These payments won’t pay any principal.
- Interest Only Plus – This option will set the Amount/Percent/Payment Calc field to Amount. The payment amount will be the amount of interest that accrues in a payment period plus the amount you enter into the Amount field.
- % of Remaining Balance -This option will set the Amount/Percent/Payment Calc field to Percentage. This will calculate payments so that after the payments are made, the principal balance will equal the percentage of the remaining principal balance you entered into the Percentage field.
- % of Principal – This works just like % of Remaining Principal Balance except the balance after the payments will be a percentage of the original principal balance instead of the remaining principal balance.
- % of Principal + Underwriting – This works just like % of Remaining Principal Balance except the balance after the payments will be a percentage of the original principal balance plus underwriting fee instead of the remaining principal balance.
- Force Balloon Payment – This option lets you choose to force a balloon payment on the loan after the schedule line. This will mean that the next payment after the schedule line is completed will cover the entire outstanding amount on the loan at that point.
Create a Template
To create a new roll schedule template, navigate to Settings > Loan > Setup New Loan > Schedule Roll Templates.
Click Add to add a new template.
Enter a name for your template in the Name field. Click Add to add a new line to your schedule.
Enter a term, rate, and other applicable information for the schedule line. Click Save to save the schedule line.
You can enter as many schedule lines as you need to complete your payment schedule. If you don’t enter enough schedule lines to cover the term of the loan, the payment schedule after the schedule roll is exhausted will be like it was in the last schedule line for the schedule roll. You can also set the “Last as Final” drop-down to “Yes” to choose to make the last payment for this line grow or shrink to accommodate late or missed payments so it will truly be the last payment.
Once you have entered all the desired schedule lines for your Roll Schedule Template, click Save to save the template.
Let’s say that you regularly offer 12-month loans with a 3-month introductory interest rate of 5%, but after the first 3 months, the interest rate jumps to 15%. To make a schedule roll template to accomplish this, navigate to Settings > Loan > New Loan Setup > Roll Schedule Templates inside your company account.
Click Add to create a new template.
Enter a name into the Name field. We will enter ‘3 Month 5% Promotion’ as the name of this template. Now click Add to add the first new schedule line.
Enter 3 for the term, since the introductory interest rate will last for 3 months. Enter 5 for the rate as the introductory 5% interest rate. Solve using Payment. Make sure you select Advanced Schedule from the Type drop-down. Since these loans are 12-month loans, we will enter 12 into the Payment Calc Terms box. You could actually choose from many different payment calculation options, but this will calculate the payment amount it would take to have 12 payments pay the loan off. Since these payments will have a 5% interest rate, they will be of a lower amount than the 15% payments. This lets the borrower see the benefit of the lower interest rate. Choose no for Force Balloon Payment and click Save.
Now click Add to enter the second schedule line.
For the second schedule line, enter a term of 9 since there will be 12 periods in this loan and 3 of them will be taken up by the first schedule line. Enter 15 as the rate, since the rate is going up to 15%. Choose to Solve Using Payment and choose Advanced Schedule from the Type drop-down. Enter Payment Calc Terms of 12. This should keep the loan at 12 payments since the interest was lower at the beginning than it is now, so all the principal should be paid by payments that are calculated at a higher interest rate for a 12-term loan.
You can now use this template on any loan. It will work correctly regardless of the loan amount.