Introduction
The Payment Method & Calculations section defines how the system calculates daily interest, handles payment collection, and applies rounding rules to interest adjustments. Accurate configuration of these settings ensures consistent repayment tracking and efficient automation of loan servicing workflows.
Navigating to Payment Method & Calculations
Click the Gear icon in the top-right corner to open Settings.
Select Company Settings.
Use the left-hand navigation menu to expand Loan Servicing > Additional Loans/Advances.
Click Payment Method & Calculations.
Tip: If you cannot access this setting, ensure you have the necessary permissions or check with your administrator.
Payment Method & Calculations
Payment Processing / PAD
This setting controls how Interest Adjustment Debits (IAD) are collected for additional loans and advances.
Setting | Description |
Collect IAD from Additional Loans/Advances via PAD | Enables automatic collection of interest adjustments using Pre-Authorized Debit (PAD). This reduces manual follow-ups and ensures timely payments. |
IAD Style on Additional Loans / Advances
Select the method used to calculate daily interest on additional loans or advances.
Option | Description |
Divides by 365 Days / Year | Uses a fixed 365-day year to calculate daily interest. |
Divides by Actual Days in a Year (366 for Leap Year) | Adjusts interest calculations based on the exact number of days in the calendar year. |
Divides by Days in a Month | Divides by the number of days in each specific month for accurate monthly accrual. |
Divides by 30 Days / Year, Assuming a Standard 30 Days / Month | Uses a simplified 30/360 financial model for uniform interest calculations. |
Daily Per-Diem for Interest Adjustment at Additional Loans / Advances
Determine how the system processes fractional interest amounts during daily calculations.
Option | Description |
Round | Rounds daily interest to the nearest cent or whole number. Ideal for simplicity. |
Do Not Round | Retains full decimal precision to ensure exact interest application. |
Payment Method & Calculations
This setting dictates whether interest is calculated using the old or new loan amount on the day an advance is made.
Setting | Description |
Interest for the Day is Calculated on the Old Loan Amount | Keeps interest calculations based on the balance prior to the most recent advance. |
FAQs
What if I need to collect IAD manually instead of via PAD?
You can disable PAD collection, but this will require borrowers to make manual interest adjustment payments, increasing operational oversight.
Can I switch between IAD styles after configuring a loan?
No. Once the loan setup is finalized, changes to interest calculation methods cannot be applied retroactively and will only apply to new advances.
What’s the benefit of using the 30/360 interest calculation model?
It provides simplified and consistent interest amounts each month, which can streamline budgeting and reduce calculation complexity.
Need Further Assistance?
For additional support, contact us:
📧 Email: support@mortgageautomator.com
💬 Live Chat: Click the question icon at the top-right corner of your screen.