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https://issues.apache.org/jira/browse/FINERACT-2143?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel&focusedCommentId=18119598#comment-18119598
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Dhananjay Bhagat commented on FINERACT-2143:
--------------------------------------------
[~mdallos], [~adamsaghy]
I tried to reproduce this scenario by creating a loan product with these
relevant configurations:
* Principal: 654,000
* 12 monthly repayments
* Interest rate: 1.15% per period
* Declining balance
* Daily interest calculation
* 360 days/year
* Interest recalculation enabled
I then created and disbursed a loan on *1 Sept 2026* and made a 40,000
repayment on {*}20 Sept 2026{*}, i.e, between the scheduled installment dates
of *1 Sept* and {*}1 Oct{*}.
I could not reproduce the schedule vs transaction mismatch shown in the images
attached to this ticket by [Mihaly
Dallos|https://issues.apache.org/jira/secure/ViewProfile.jspa?name=mdallos].
The repayment is consistent in both the repayment schedule and the transaction
data:
* Repayment: 40,000
* Interest paid/allocated: 7,521 (the ticket image shows 7352.33 due to
different configurations)
* Principal paid/allocated: 32,479
* Principal outstanding after repayment: 621,521
For eg, the repayment transaction returned by the API contains the 40,000
repayment with 32,479 allocated to principal and 7,521 allocated to interest.
The loan repayment schedule also reflects 32,479 principal paid and 7,521
interest paid for the period.
However this behavior does not appear to match the expected behavior described
in the ticket as:
{quote}The payment is spent on the interest until payment date. The remaining
spent on the balance and interest due is calculated for the rest of the days
till next installment due.
{quote}
Here, the 7,521 interest amount in my reproduction corresponds to the full
scheduled period from *1 Sept* to {*}1 Oct{*}. However, the expected behavior
appears to be to first calculate interest from *1 Sept* up to the repayment
date ({*}20 Sept{*}), apply the interest portion of the repayment, and use the
remaining repayment amount to reduce the principal. The interest for the
remaining period, from *20 Sept* to the next installment date ({*}1 Oct{*}),
should then be recalculated based on the reduced principal.
My understanding of the expected calculation from the above description is:
1. Calculate interest only upto the repayment date.
2. Apply the accrued interest portion of the repayment.
3. Apply the remaining repayment amount to principal.
4. Recalculate interest for the remaining days until the next installment date
using the reduced principal.
Can you confirm whether this is the intended behavior for this ticket?
I was able to reproduce the mid-installment repayment scenario described above,
but I could not reproduce the schedule vs transaction mismatch shown in the
attached images. If there are any additional conditions or configuraton
differences relevant to the original mismatch, please let me know so I can
investigate it further.
> Dynamic loan product prepayment results mismatching Schedule and accounting
> ---------------------------------------------------------------------------
>
> Key: FINERACT-2143
> URL: https://issues.apache.org/jira/browse/FINERACT-2143
> Project: Apache Fineract
> Issue Type: Bug
> Reporter: Mihaly Dallos
> Priority: Major
> Attachments: image-2024-10-18-10-06-00-062.png,
> image-2024-10-18-10-14-41-963.png, image-2024-10-18-10-19-50-306.png
>
>
> h4. *Steps to reproduce:*
> # Dusburse a loan of a dynamic loan product
> # make a repayment in between two instalments
> # compare the transaction and the schedule
> *Actual result:*
> The schedule shows that the paid amount reduces the principal, and interest
> is calculated accordingly which remains outstanding. The transaction amount
> is allocated differently though, it shows that the interest is paid and only
> the remaining amount is spent on the principal.
> Schedule:
> !image-2024-10-18-10-06-00-062.png!
> Transaction:
> !image-2024-10-18-10-14-41-963.png!
> h4. Expected result:
> The payment is spent on the interest until payment date. The remaining spent
> on the balance and interest due is calculated for the rest of the days till
> next installment due.
> !image-2024-10-18-10-19-50-306.png!
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