Loan Foreclosure
Loan Foreclosure is the process of closing an active loan before its scheduled tenure by repaying all applicable outstanding dues, including the remaining principal, interest, and any additional charges.
Frappe Lending allows borrowers to close their loans early by recording a foreclosure payment through the Loan Repayment doctype using the Loan Closure repayment type.
Did You Know?
Foreclosure payments help lenders accurately record early loan closures while ensuring that all applicable dues and charges are accounted for before closing the loan.
Creating a Foreclosure Payment
Creating a foreclosure payment follows the same process as creating any other Loan Repayment entry in Frappe Lending.
Follow these steps to create a foreclosure payment:
- Open the Loan Repayment list.
- Click on Add Loan Repayment.
- Select the required Loan Account.
- Set the Repayment Type as Loan Closure.
- Enter the applicable closure amount.
- Save and Submit the repayment entry.
Home > Lending > Disbursement and Repayment > Loan RepaymentNote
Frappe Lending validates the foreclosure amount before submission. If the entered amount does not match the calculated closure amount, the system will display a validation message.
Applying Foreclosure Charges
During foreclosure processing, users can add applicable charges along with the closure payment. These charges may include foreclosure fees or other additional amounts configured for the loan.
While adding charges, ensure that the charge amount is included in the total repayment amount before submitting the transaction.
| Component | Description |
|---|---|
| Closure Amount | The amount required to repay the remaining loan dues and close the loan before its scheduled maturity date. |
| Foreclosure Charges | Additional charges applied when closing the loan early. |
| Total Repayment Amount | The final amount submitted by the borrower, including the closure amount and applicable charges. |
Foreclosure Validation
Before submitting a foreclosure payment, Frappe Lending performs validations to ensure accurate loan closure processing.
- The repayment type must be selected as Loan Closure.
- The entered closure amount must match the applicable foreclosure dues.
- Any added charges must be included in the total repayment amount.
Best Practices
- Verify the outstanding loan balance before processing foreclosure.
- Review applicable charges before submitting the closure payment.
- Ensure all additional charges are included in the final repayment amount.
- Use the Loan Closure repayment type only for complete early loan closure.
