Early payoff – How to do this in Margill Loan Manager

Q: How to do an early payoff in Margill Loan Manager

A: For example, the loan term was originally for 5 years or 60 months (so end date was in June 2020). The borrower calls you, the creditor, and wishes to payoff his/her loan early, on October 12, 2018.

Original payment schedule:

 

I first recommend to take a snapshot of the full 60 month payment schedule – this was we have an easy to consult original payment schedule. Click on “Attach”. A PDF will be attached to the Record.

Next change the date to October 12, change the payment to 0.00 so the payoff balance is now shown (64,297.75 in this case). Notice I also changed the 2018-11-01 payment date to 2018-10-13 to see my daily interest on the balance (4.92 per day).

Change the Payment to 64,297.75 (for Oct 12).

You can then delete the next lines that are no longer required (right mouse click).

You could also decide to add extra fees for an early payoff if the contract included this (use Column fees or Line status fees). This will increase the balance of course.

Also, you could create a special payment-type Line status to identify all your early payoffs. Could be interesting for your reports.

If the final payment is late, nothing stops you from changing this final date to enter the true payment date. Extra interest will accrue.

How to obtain the daily interest amount (per diem) in Margill Loan Manager

Q: How to obtain the daily interest amount (per diem) in Margill Loan Manager?

A: This can be added very easily through a simple Mathematical Equation. 

Go to Reports > Equation Management and click on  

  1. Name the Equation
  2. Select the two required fields (balance and interest rate) from the various themes on the left
  3. Add the operators with the  button
  4. Divide by 365 days with the  button
  5. Save

You can now use this simple interest Equation in various reports picking it up in the Equations theme:

Record List Customized:

Document Merge (DOCX., RTF, PDF) for your Invoices and Statements:

Interest-only: Regular monthly interest vs. Exact day interest

Question:

My company does interest-only 12 month bridge loans calculated in two ways.

  1. Payments are based on the number of days in a month with a balloon payment at the end (so payments change depending on the month)
  2. Each of the 12 payments is equal with a balloon payment at the end.

Can these two calculation methods be done in Margill?

Answer:

Yes.

In Simple interest, Margill will usually use the exact number of days in a month and in a year to compute the interest. The Day count would be Actual/Actual (or Actual/365 or Actual/360).

If the interest is to be the same every month, the use the 30/360 Day count which simulates months that are of the same length.

For Compound interest (what is called the Effective rate method – the banking method), there is an extra  calculation method option that calculates using the exact number of days and another that splits payment in equal periods. The Day count does not have to be used to “artificially” simulate the equal periods.

A borrower missed a payment last month. This month he doubles up his payment to compensate. Doubling should get him back on track but I get a higher balance at the end of the loan? Help!

Question: A borrower missed a payment last month. This month he doubles up his payment to compensate. Doubling should get him back on track but I get a higher balance at the end of the loan? Help!

Answer: Your borrower will be CLOSE to back on track but there was accrued interest for the month he missed so this is why you are not back to the same end balance (0.00).

To get the exact payment that should have been paid to compensate, he will have to pay the outstanding interest. An easy way to get the exact payment is to highlight that payment line,  right click and do this:

Can I apply a payment only to principal even if there is outstanding interest?

Question: Can I apply a payment only to principal even if there is outstanding interest?

Answer:

Yes when this advanced feature is activated. In the Trial version, this is not activated by default since a more advanced feature.

To activate, go to Tools > Settings > User Settings > “Options: Interest-only and Fixed Principal” (blue link). The third option will allow you to pay principal first. You can set this as your default or have Margill give you the three options when you are in a loan. I would check “Offer the three option when creating a loan” for maximum flexibility.

Go back to your loan. Go on the payment that is to pay principal only. Right click with the mouse:

This window will appear allowing you to enter the amount of principal to pay back. I wish to pay $1000 in principal in this example:

This window will appear allowing to choose the third option that will pay back principal before paying any outstanding interest. Notice we write “NOT SUGGESTED”. We wrote this because it is not a standard refund order but we will be taking this off since we see in practice that this is in fact used quite often, particularly in inter-company loans.

Now you will see that this payment ($1000) pays principal even if there is outstanding interest.

 

How to enter loan number, Federal Tax ID, set up automatic late fees, create a line of credit, etc.?

Questions:

In Margill Loan Manager:

1) How/where do I enter my loan #? Can I change the identifier number automatically assigned by Margill?

2) Most of my clients are businesses, and I do not see a place to enter the Federal Tax ID number. I would also like to add fields for type of company, state of formation, year of formation.

3) When posting payments, most are not made on the exact due date, so I need to right click and post the payment into the schedule, is that correct?  Also, where can I enter the type of payment and identifier, like the check number?

4) How to set up a Line of Credit account where all the payments are interest-only except the last one

5) How to automatically set up Late Fees?

Answers:

1) How/where do I enter my loan #? Can I change the identifier number automatically assigned by Margill?

A unique identifier is created automatically for each loan. You an also enter your own under Data > General:

And your loan number can show up on top of the loan window (set this up under Tools > Settings):

 

2) Most of my clients are businesses, and I do not see a place to enter the Federal Tax ID number. I would also like to add fields for type of company, state of formation, year of formation.

You can create as many custom fields as you want. You would create these for the Borrower and others for the Loan – you tie the field to the closest – Borrower or Loan (and even Creditor but you may not need these custom fields).

Tools > Settings:

 

3) When posting payments, most payments are not made on the exact due date, so I need to right click and post the payment into the schedule, is that correct?  Also, where can I enter the type of payment and identifier, like check number?

You do not need to right click. You change you Line status column from a Due Pmt to a Paid Late Pmt. This small window will then appear to enter the true payment date – in this example Borrower was supposed to pay on the 1st but paid on the 22nd. The date can also be changed directly in the Pmt Date column.

The Post payment Tool (no screenshot below) allows you to post payments in batches as opposed to one by one. They can be Paid, Unpaid, Late, Partial and you can add the check number and add fees manually if you wish (or change the automatically added fees). Very flexible…

If you did not wish to charge extra interest if the payment was only a few days late, you could have entered the true payment date in the “True Pmt Date (Grace/EFT)” column without changing the “Pmt Date.” Transaction reports would pick up this special date.

You can also add a Comment to each payment line and multiple other elements that you customize.

4) How to set up a Line of Credit account where all the payments are interest-only except the last one

You would first create a Record type called Line of credit (Tools > Settings).

You then create a Record and in the Data tab enter this information. I advanced 50,000 on 9/5/17.

 

Notice “Irregular” payments (a screen will follow allowing you to enter advances and payments if this was an existing line of credit – ignore this window if this is a new line of credit – click on:

Once the payment schedule is calculated (one line schedule at first), you simply add lines at the end depending on whether they are Advances or Payments. Here there was a second $15,000 advance and a $3,000 payment. I also added an Information line in the year 2020 to keep the interest accruing.

You can add or insert line with the right mouse click or with these icons on the far right:

 

When a payment is made, column fees and then interest are paid first, then principal. In the example above, the $3,000 payment will pay principal. You could have had Margill compute the total interest to be paid (right mouse click).

If monthly payments MUST be made by the Borrower to pay interest, then you would have set up a line of credit with Monthly payments (not Irregular) and would have specified that these pay interest. This is a more advanced feature called “Line Behavior.” Let me know if this is what you want, and I can explain this in more detail.

5) How to automatically set up Late Fees?

You can create one or multiple Automatic fees.

Go to Tools > Settings > Column Fees: Automatic. You then select the Line status and create your own rules. You can charge an amount, a percentage of the balance, a percentage of the unpaid portion, etc.

 

Long first payment deferral versus normal one period (month) deferral

Question:

When we compare a loan using a normal amortization schedule (amortization book or calculation on an online website) we do not reach the same number of payments in Margill as in the on-line calculator. Why is this?

Here is an example:

Origination Date:  July 14, 2017.
Original Principal: $ 11,374.
10% interest rate
48 months
Deferred interest and payments until Feb. 15 2018.

Normal amortization tables show payment of approx. $288.00 @ 48 months.
Margill is showing us 51 + payments @ $288.00.

Answer:

This is a most common error because of the “Deferred payment.”

Amortization tables (static) and on-line calculators cannot include deferred payments. They are usually exactly one period (often one month) after the Origination date. You could not thus get the proper payment with a 7 month deferral.

If I do a 48-month loan, with first payment exactly one month after July 14, I thus get the $288 you are looking for ($288.86 to be precise). Leave the payment blank so it is calculated.

So this is not what you are looking for since my first payment date is not properly deferred.

Let’s say we really do want 48 payments with the February date.

Because of the deferred first payment (6 months after a normal 1 month deferral) I am now at a payment of 303.81. Much higher since more interest accrued before any principal gets repaid.

From the screenshots you sent me, you want a 288.00 payment (not 288.86):

So I leave the the Amortization and Term blank and the number of payments will be computed to 52 with a last payment of $82.76.

 

Follow up question:

When I wrote “Deferred interest and payments” I meant thee is no interest from July 2017 to February 2018.

Follow-up answer:

You can simply change the Rate column to 0.00%. Balance then becomes minus $1047.44.

Then delete the extra lines (for which the balance is now negative) by highlighting them > right click with the mouse.

 We are now at 47 payments of $288.00 and the last one at $204.61 (since no interest for 7 months).

 

How to extend a loan once the loan has reached a maturity? Term is to be extended by 48 months.

Question:

How to extend a loan once the loan has reached a maturity? Term is to be extended by 48 months.

Answer:

As you may know, Margill Loan Manager is probably the most visual software on the market so this kind of change takes a second.
In the payment schedule, simply click on the icon to the right of the window or right click with the mouse > Add > Add Many Lines.

Then specify 48 Payments and the Payment Amount. Add other specifications such as the payment frequency (monthly or other) and when the next payment (after the initial loan end date) is to be paid.

You can also go one step more by selecting your 48 lines, right click and have the payment recomputed to give 0.00 as the final balance or another residual amount.

Even the interest rate could be changed for the next 48 payments (as always with the right mouse click):

Can Margill Loan Manager do progressive Advances to my clients?

Question:

Can Margill Loan Manager do progressive Advances to my clients?

For example, my borrower was authorized for a $100,000 loan but this will be disbursed in stages. So 15,000 one day, 10,000 another and so forth…

Answer:

Short answer… very easily…

You first create a new Record. In this case the first advance of 15k is on 06/06/2017 with regular payments on the first of each month starting July 1. To be repaid over 5 years (60 months).

You can Compute and the following preliminary schedule is created. If we were to leave it at that, we would have 60 payments of $305.59.

For information purposes, let’s enter that the loan is for a maximum of 100,000 (General tab):

Now for the next draws. Do you know when they are to be paid of not? If so, you can enter them on the set Advance dates as Additional Principal (Loan). Notice below there are 2 more Advances, the first for 10k and the second for 25k. We include these as negative amounts to increase the Balance.

I also used the right mouse click to recompute the payments to get 0.00 as my ending balance after 60 months.

So the new payments become 1099.54. You could recompute the payments to give 0.00 at any time or stretch out the loan (add more payment months). As you wish….

If you do not know when the money is to be advanced to your borrower, then you enter the Additional Principal as the information comes in and your recompute your payments (increase them) as more principal is advanced.

How to setup weekly or biweekly payments

Question:

How to setup weekly or biweekly payments in Margill Loan Manager?

Answer:

When creating a new record, set up the Period of Payments at ”By day(s)” and input 7 for weekly or 14 for biweekly payments.

We also suggest that you setup the Compounding Period to match the Period of Payments.