What’s criminal? Lenders beware – amendments to Criminal Code under Bill C-274

An Act to amend the Criminal Code Bill-C-274 (the Bill) entered first reading in the House of Commons on May 11, 2021. The Bill would amend1 the definitions of “criminal rate” and “interest” in subsection 347(2) of the Criminal Code, while also repealing section 347.1, which had allowed certain exceptions for payday loans.

The Bill will be of interest to lenders, especially payday lenders and other non-traditional lenders, as the amendments proposed would lower the criminal rate at which interest charged or received is under the Criminal Code from 60% to 30%.

To continue to read the text by Me Joyce M. Bernasek and Me Ramz Aziz from the law firm Osler, follow this link.

 

Is Margill Interest calculator or Margill Law calculator able to create a compound interest calculation with irregular payments and interest rates that change over time?

Q: Is Margill Interest calculator or Margill Law calculator able to create a compound interest calculation with irregular payments and interest rates that change over time?

So is my understanding correct that your software will be able to work out the balance owing in terms of an overdue loan with compounded interest based on the following example:

Initial amount o/s            R 250 000             As at 1/01/2020                 Interest rate 7%

Interest rate changes as follows:

Format is DD/MM/YYYY
01/07/2020                         7.5%
01/09/2020                         8.25%
07/11/2020                         8.75%
05/02/2021                         9%

Payments received (R = Rands – South African currency):

5/02/2020            R 2 000
7/03/2020            R 5 000
1/04/2020            R 1 000
30/6/2020            R 500
5/08/2020            R 500
3/09/2020            R 500
15/01/2021            R 5 000
7/02/2021            R 2 000

What is the amount o/s as at today, with interest compounded monthly? Today we are April 30, 2021

A: Yes, very easily. Such calculations are the purpose of the software. Margill can do thus much more easily than with a spreadsheet and a lot let risk of error.

This was not really necessary but I first constructed an interest table (you could have changed the rates manually in the resulting payment schedule).
Go to Rate Tables and click on New Table. You must use this icon to add the dates and interest rates: .
Save the table. I saved it under the name “Tanya”…
Then go to the very powerfal calculation called “Recurring Payments”. Here is the information to first plug in (never mind my the $ currency –  my Windows currency is the $ – yours would be R).
Notice my Payment frequency is Irregular.
Notice also that I used an Interest Table instead of a fixed interest rate – we see the Tanya table.

Now to enter the irregular payments, click on . This window shows up.

You can either entre the payments manually in here (even add negative amounts that are principal increases):

Even if there weren’t many payments, I created a small Excel sheet for the import – very useful when there are dozens, hundreds or thousands of payments:

Then press on the Excel icon and select the Excel file:

Now Save and you get back to this window. Notice the check  that shows there’s data in the Irregular payments. We are now ready to Compute the Results table.

You will see this window appearing that asks until when do you wish to compute interest. I entered April 30. Interest will be computed until April 30 in the morning, not end of day.

Press on OK and we have the results.

Notice I added a line at the end just in case I wanted the interest until April 30 end of day (midnight) – so added a line with May 1. Industry standard says first day included, last day excluded. Use the icons on the far right to add, insert and delete lines. There’s also an Undo button.

You can save and update this table as required – you can add lines, change payments, insert payments if by error you had forgotten one, add or change interest rates, etc. You can do just about anything with this calculation.

The right mouse click offers many options:

 

Hope this answers your questions…

 

 

In the Loan Manager, is it possible to change a payment date for all loans at the same time?

Q: In the Loan Manager, is it possible to change a payment date for all loans at the same time? For example, I want to change the date from March 26 to March 27?

A: This can be done in batch but each date will have to be modified. You can do this for “Due Pmt” and “Paid Pmt” lines only.

  • Go to Tools > Post Payments
  • Check “Use Date interval”
  • Enter dates between March 26, 2021 and March 26, 2021 (or other dates)

In theory, you would change only the Due Pmt lines so therefore you don’t have to check “Include all Payment Line statuses”.  In the following example, I checked the option but this is usually not necessary…

Afterwards, you need to copy and paste the March 27 date (the new date) and modify line by line (faster with Ctrl C and Ctrl V (copy/paste) compared to manually entering teh date):

You will then be able to modify the dates and the lines will become light green. The chronological order of the lines must be followed:

Once the changes are done, click “Apply” and dates will be modified.

Webinar – What’s new in Margill Loan Manager 5.2

Last February 11, 2021, the Margill Team held a webinar to introduce the new features of the Margill Loan Manager software, version 5.2.

For those who have missed it or if you wish to see it again, here it is:


 

Credit agreement best practice – LIBOR cessation

Osler law firm offers an excellent article regarding the London Interbank Offered Rate (LIBOR) which will eventually end. And even in these difficult times of the COVID-19 pandemic, there is no suggestion that LIBOR’s end will be delayed and should end, as expected, on December 31, 2021.

A text by Andrew G. Herr, Lisa Mantello and Joyce M. Bernasek that you can read here.

Global FinTech survey report – Key findings

Financial institutions, including banks, asset/fund managers and insurers, as well as established FinTech businesses and start-ups, have been presented with major disruptive events with the advent of COVID-19 and national lockdowns, and with the impending risk of global or regional recessions.

In May and June, a group of attorneys from the law firm Norton Rose Fulbright undertook a survey of a range of banks, asset/fund managers, insurers, established FinTech businesses, FinTech start-ups and venture capital and consulting firms across the globe.  You can consult the key findings of this survey.

To read the article, follow this link.

Test#2

test1

I would like to convert 7500 of accrued interest to principal. Can this be done in Margill Loan Manager?

Question: I would like to convert 7500 of accrued interest to principal. Can this be done in Margill Loan Manager?

Answer: Certainly with special Line statuses.

First, go to Tools > Settings:

Make sure “Interest paid” is available (not checked to Hide from menu) as well as an “Add. Principal X” Line status.

We will rename Add. Princ. (3) to “Capitalized interest” (or another name that fits your needs). We cannot however rename “Interest Paid” so you must be careful when using this. If it is already used to pay, on a cash basis, pure interest in other loans (as opposed to using it as we will do now), then you will have to note this in your reports not to mix up cash and non-cash items.

Normal scenario where Interest remains interest (in Simple interest no interest is generated on interest – Day count is 30/360 for equal interest every month):

 

We will “pay” 7500 in interest and add 7500 in this new “principal” (non cash). Insert 2 lines (right mouse click)

Since interest is now capitalized (so really brought to Principal), the new monthly interest amount increases. You could have said no interest on the 7500 but this becomes a little strange (right mouse click on the line).

When reporting you will need to isolate these special transactions as not to mix them up as cash transactions.

Personally, I would not have converted interest to principal since I believe from an accounting perspective interest must remain interest, not be converted to principal, but you are doing this for a good reason…

I would have done it this way by telling the system to capitalize the 7500 (thus there would be interest on this amount- goes to Computational Balance):

Comes up to the same mathematical results but interest remains interest:

After more than 2 years of work, the latest version 5.1 of the User Guide is now available. In it you will learn all you need to know about the new features.

Webinar – What’s new in Margill Loan Manager 5.1

A host of new features have been introduced with the launch of Margill Loan Manager 5.1.

New features are fun but you need to know they exist.

We’ve hosted a 30-minute webinar in which we have explored these new functions.