NetLoan - Defined Principal Payment

Defined Principal Payment

Use Case: The Defined Principal Payment can be used for any payment amounts that should apply a specific amount to the principal balance in addition to paying off the outstanding interest (current period interest expense plus the accumulated accrued interest balance). 

Prerequisites:  Loan modifications must be entered in NetLoan prior to running month-end amortization for the period the new payment fall into.

STEP-BY-STEP PROCESS 

  • Navigate to a loan record where the modification is to be recorded and click the Modify Loan button.


  • On the Loan Modification click the down arrow on the Modification Type field and select Adjust Loan Terms.

Option: Note you can adjust the loan term in this section if the Defined Principal Payment affects the remaining loan terms. To do so just input the new remaining periods in the Adjusted Remaining Loan Term field.


  • Next, use the Defined Principal payment type, select an effective date for the payment, the amount by which you would like to adjust the principal balance, and if the payment is a one-time payment select One-Time in the payment frequency field, otherwise select one of the other frequency options that should apply.


  • After double-checking inputs for the modification, click Modify Loan.
  • You will be navigated back to the loan record where you can click the refresh button until the button disappears and the schedule has been updated.
  • Note the additional schedule line for the principal payment on the effective modification date. You will see the amount entered for the payment in the "principal adjustment" column and the "payment" column includes the principal adjustment plus interest. Additionally, if you opted to change the remaining loan terms you will see the schedule now reflects those updated terms.

  • The NetLoan Payment record(s) will be saved on the Payments subtab of the loan to save historical payment changes.

  • If a modification was entered in error you can select the Reverse Modification button that is located at the top of the loan record. This will reverse the modification you just made. Check out our Modification Reversals article for more information. Note: If the amortization entries for that month have been run you will no longer have the option to reverse the modification.



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