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RC - Issue Example1
RC - Issue Example1
RC - Issue Example1
Loan 01920562
PCP Clearance Loan
Rate changed from 5.95% to 7%
While this loan has a small UNC amount (€309), it is not the UNC that is causing the issue. This loan
migrated with a final repayment of €222.09. Because the final repayment amount is significantly lower
than the constant repayment amount, when the rate change is applied and the new schedule is built,
the payments are more evenly spread so that the final repayment amount is not much lower than the
constant repayment. This in turn has the effect of reducing the constant repayment amount on this
loan even though the rate has increased.
Impacted loans
Aside from loans which have migrated from R08 with a significantly smaller final repayment there is
another scenario where this issue may arise. When a member is applying for a loan they have the
option to choose the term or the repayment amount. When they choose the repayment amount, there
may be a significant difference between the constant repayment and the final repayment.
For example:
Note: There may be other scenarios whereby the constant repayment amount reduces when there is
an increase in the interest rate