Loan Management: How do I temporarily reduce the payment amount for an installment loan?

In response to borrowers' request for temporary payment relief, a lender may decide to reduce the installment loan payment amount for a period up to 12 months before resuming the contractual payment schedule.  This function is available for currently Active Loans using Smart ACH as the repayment method. 

To access this function, click "Reset Schedule" on Loan Payment Schedule page then select "Temporarily Reduce Payment."

Using this function, you can create a new payment schedule including a limited period of fixed low payments before resuming the contractual payment amount until the loan is paid off at the contractual interest rate.  By entering inputs into the following fields--"Reduced Payment Amount", "Number of Reduced Payment", "First Reduced Payment Date", you can customize the payment amount and duration of this temporary period based on the borrower's need.  Once these inputs have been entered, you can click on "Preview" to view the newly calculated payment schedule.

It is important to note that the Reduced Payment Amount entered must be no less than the Accrued Interest amount.  This constraint ensures that the remaining principal payment will not increase as the borrower makes payments at the reduced level. If the Accrued Interest Amount is too high, which can happen if the loan has missed a few payments, you can reduce it by changing the Loan Balance or Interest Rate by using the "Modify Remaining Loan Schedule" function through the same "Reset Schedule" button before using the "Temporarily Reduce Payment" function.

In addition, adding a period of reduced payments will extend the maturity of the loan. Consequently, the revised Remaining Term of the loan may exceed the maximum Loan Term set for the loan product.