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#409153 - 08/16/05 07:15 PM Application of Loan Payment
Millie Offline
Junior Member
Joined: Apr 2003
Posts: 44
North Carolina
Our consumer car loans are installment loans. The Note reads that payments are due on a specific date each month. Payments will be applied first to all accrued upaid interest with the remainder to principal. According to our senior lender, we should be satisfying all accrued interest up to the posting day with the remainder to principal. Our servicing manager thinks we should pay interest up to the due date.

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Lending Compliance
#409154 - 08/16/05 09:04 PM Re: Application of Loan Payment
HRH Okie Banker Offline
Power Poster
Joined: Jan 2003
Posts: 3,070
Our consumer note says:

"applied first to any charges I owe other than principal and interest, then to interest that is due, and finally to principal that is due"
Just working here until I get my letter from Hogwarts.

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#409155 - 08/16/05 09:06 PM Re: Application of Loan Payment
rainman Offline
Power Poster
Joined: Nov 2004
Posts: 3,115
If the note doesn't say "applied first to all unpaid interest accrued through the due date" then why would it be applied that way? "All accrued unpaid interest" seems (to me) fairly straightforward - all accrued interest through the date of payment. If that's after the due date, then more interest has accrued since the due date, and should be paid. If that's before the due date, then the additional interest through the due date hasn't accrued yet.
Nobody's perfect, not even a perfect stranger.

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#409156 - 08/16/05 10:08 PM Re: Application of Loan Payment

Our loan payments post similarly. Once a bill has been generated, the bill is satisfied with the payment. If the customer pays the exact amount as the invoice, then it is applied as per the invoice. If the customer pays less or more than the invoice, then it goes to accrued interest. Perhaps your loan system has the same limitation?

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#409157 - 08/18/05 07:40 PM Re: Application of Loan Payment

If your notes states and your system applies payments to LATE FEES first, how does your system avoid violating AA - which says if the only thing unpaid is the late fee, another late fee cannot be assessed. I don't believe our core processing system would be able to figure out that the amount short for principal was exactly the same as the paid late fee.

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