Loan Products and Repayment Methods

Chinese source: 贷款产品与还款方式 Locale: en-US Audience: Internal learning

Concept

A loan product defines how a loan can be originated, priced, disbursed, repaid, prepaid, revolved, and handled after delinquency.

The repayment method determines how the system generates repayment schedules and installment amounts.

Common Loan Products

Product Type	Plain Meaning	System Focus
Consumer loan	Personal-purpose lending.	Limit, term, repayment account, purpose.
Small business loan	Lending for business operations.	Credit line, collateral, use of proceeds, cash flow.
Mortgage-secured loan	Secured by real estate or similar collateral.	Valuation, lien registration, release.
Pledged loan	Secured by pledged assets.	Pledge freeze, valuation, disposition.
Unsecured loan	Based mainly on creditworthiness.	Risk grade, limit, risk-based pricing.
Revolving loan	Reusable credit within a limit.	Usage, availability restoration, drawdown control.

Common Repayment Methods

Method	Feature	How to Read It
Bullet principal and interest	Principal and interest paid at maturity.	Common for short-term lending.
Interest-only with principal at maturity	Interest paid periodically, principal at maturity.	Common in working-capital lending.
Equal payment	Periodic payment is broadly stable.	Principal and interest mix changes over time.
Equal principal	Principal is fixed each period; interest declines.	Higher payment burden early.
Pay-as-you-use	Flexible drawdown and repayment.	Focus on actual days outstanding and line restoration.
Installment loan	Fixed installments by schedule.	Common for consumer installment lending.

Product Parameters to Document Later

• Eligible customer type and product type.
• Minimum and maximum amount, term range.
• Rate type, rate adjustment, and penalty interest rules.
• Repayment method and schedule generation.
• Prepayment rules and prepayment fees.
• Grace period, delinquency recognition, and collections strategy.
• Collateral requirements.
• Disbursement account, repayment account, and accounting rules.

Risks

Risk	Explanation
Product rules conflict with agreement terms.	Interest, repayment, or delinquency processing may be wrong.
Repayment method is configured incorrectly.	Repayment schedules and customer due amounts are wrong.
Prepayment rules are missing.	Interest, fees, and remaining principal become disputable.
Revolving availability is restored incorrectly.	Customer may overdraw or lose available credit.

Related Topics

Topic	Use
Repayment Schedules and Installment Breakdown	Understand schedule generation.
Interest Accrual, Billing, Penalty Interest, and Compound Interest	Understand rate effects.
Credit Lines, Loan Agreements, and Notes	Understand how product rules land in agreements and notes.