NetLoan — Non-Loan Payments vs. Custom Payment Types
Overview
NetLoan supports two ways to handle payment obligations that go alongside a loan but require separate tracking from principal and interest. Non-loan payments are a built-in mechanism for accounting for additional amounts — like escrow or insurance — using accounts already configured on the loan type. Custom payment types let you define named payment types with their own GL accounts, billing items, and schedule columns, and are suited for situations that need more specificity or separation than the default non-loan payment setup provides. This article explains the difference between the two and helps you determine which to use.
Prerequisites
- NetLoan is installed.
- To create custom payment types, the user must have access to NetLoan > NetLoan Setup > Manage Payment Types.
- Non-loan payment accounts must be mapped on the Loan Type record before non-loan payments will post correctly.
Use Cases
Non-Loan Payments
Non-loan payments are included with all NetLoan licenses and require no additional setup beyond mapping the relevant GL accounts on the Loan Type record. They are used when a loan carries an additional recurring obligation — such as escrow, property taxes, or insurance — that needs to be tracked and collected alongside the loan payment but must not affect the loan's principal balance.
Non-loan payments appear as separate line items on the amortization schedule. They are not included in the Payment Amount field on the schedule line — they appear in their own columns. The GL accounts they post to are driven by the Non-Loan Payment Expense Account and Non-Loan Payment Income Account fields on the Loan Type record (fields custrecord_da_type_nonln_expense_acct_1 through _3 and custrecord_da_type_nonln_income_acct_1 through _3).
Use non-loan payments when:
- The loan has one type of additional non-principal obligation (e.g., all non-loan payments are escrow).
- The GL accounts configured on the Loan Type record apply to all non-loan obligations on that loan.
- There is no need for a custom billing item or clearing account override per non-loan payment type.
Custom Payment Types
Custom payment types are created under NetLoan > NetLoan Setup > Manage Payment Types. Each custom type requires a Parent Type, which determines how the payment behaves within the loan. The available parent types are:
Non-Loan Payment Only — The payment does not affect the loan balance. Behaves like a standard non-loan payment but appears in its own labeled column on the schedule. Use this when you need a distinct, named payment type (e.g., "VAT", "CAM Charges") that requires separate GL accounts, a custom billing item, or custom schedule line fields.
Fee — The payment is treated as a fee that can be amortized over the loan term. Does not affect the loan principal balance. Supported amortization methods are Straight Line and Straight Line - Daily. (Note: Effective Interest: Loan Principal is not available for custom fee types — that method is reserved for Capitalized Origination Fees.)
Principal Adjustment Fee — The fee is capitalized into the loan balance, increasing the principal. This results in a different GL impact: when the loan closes or the fee is forgiven, the offset posts to the loan's principal balance account rather than a standalone fee account.
Additional parent types are available. For a full list, see NetLoan - Payment Type Parent Type Options.
Use a custom payment type when:
- You need a named, labeled payment type that appears as its own column on the amortization schedule.
- Different non-loan obligations requiring different GL accounts (beyond the three account slots on the Loan Type).
- A specific billing item must be used for invoicing that differs from the Loan Type's default.
- You need to override the payment clearing account for a particular obligation.
- Custom fields need to be tagged to the payment type for reporting on schedule lines.
- The obligation is a fee that should be amortized (use Fee parent type).
- The fee should be capitalized into the principal balance (use Principal Adjustment Fee parent type).
Choosing Between Them
| Scenario | Recommended Approach |
|---|---|
| Single type of ancillary payment (e.g., escrow only) | Non-Loan Payment |
| Multiple distinct non-loan obligations needing separate GL accounts | Custom Payment Type (Non-Loan Payment Only parent) |
| Need a labeled column per obligation on the schedule | Custom Payment Type (Non-Loan Payment Only parent) |
| Fee that amortizes over the loan term (straight-line) | Custom Payment Type (Fee parent) |
| Fee that increases the loan principal balance | Custom Payment Type (Principal Adjustment Fee parent) |
| Need a custom billing item for invoicing this specific payment | Custom Payment Type (any applicable parent) |
| Simple setup with no custom GL or billing requirements | Non-Loan Payment |
Considerations
GL accounts for non-loan payments are set at the Loan Type level. If multiple non-loan obligations need different accounts, either use the three account slots available on the Loan Type or create separate custom payment types (Non-Loan Payment Only parent) with their own account overrides.
Non-loan payments do not appear in the Payment Amount field on the schedule line. This is expected behavior. If clients need a combined total, that requires a custom column or report.
Custom payment type (Non-Loan Payment Only parent) vs. standard non-loan payment is primarily a distinction of labeling and configurability, not behavior. Both result in payments that do not affect the loan balance.
Fee amortization methods for custom Fee parent types are limited to Straight Line and Straight Line - Daily. Effective Interest: Loan Principal is not supported for mid-loan fees.
Billing items: If a custom payment type has a billing item defined, it overrides the billing item on the Loan Type for that payment.
