Rink Based Lending

Lending Lending Rink Based Lending

Risk Based Lending (RBL) in the FLEX system allows for dynamic interest rate assignment during loan application and disbursement, based on predefined risk rate records and specific loan criteria. This document outlines the configuration and usage of RBL within the FLEX environment.

Overview of Risk Based Lending

RBL rates are displayed and applied based on conditions set within the RBL configuration and the characteristics of the loan being processed.

Key RBL Steps

To effectively utilize RBL, the following steps are required:

  1. Set-up Available Risk Rates: Configure risk rates through the Risk Based Lending Configuration.
  2. Enable RBL for Loan Types: Activate the RBL option for each relevant loan type via Loan Type Configuration.
  3. Loan Application/Processing: During new loan application or loan processing, RBL rates that match the defined criteria will be available for selection.
  4. Score and Grade Table Setup: Ensure credit score and grade tables are properly set up in the credit score processor and score type general control.

Risk Based Lending Configuration

The RBL Configuration module is where you define and manage the various risk-based rates.

Accessing RBL Configuration

Navigate to the RBL Configuration through the FLEX Main Menu:

  • System Administration
    • General Configuration
      • Configuration
        • Risk Based Lending Configuration

Managing Risk Based Rates

The Risk Based Lending Configuration screen displays all currently defined Risk Based Rates.

  • Editing Existing Records: Highlight an existing record and click Edit.
  • Creating New Records: Click Add to create a new RBL rate code.

Adjusting Rates

The “Adjust Rates” functionality allows for bulk modifications to existing RBL rates.

  • Access: Click the Adjust Rates button on the RBL Configuration screen.
  • Options:
    • Risk Rate / Minimum Rate:
      • Select Risk Rate to modify the primary risk rates.
      • Select Minimum Rate to modify the minimum rates defined within each RBL rate.
      • Note: If both need adjustment, this option must be applied twice.
    • Rate Change Option: Choose how rates will be adjusted:
      • Adjust Rate Up: Increase rates by a specified percentage.
      • Adjust Rate Down: Decrease rates by a specified percentage.
      • Fixed Rate: Set rates to a specific value.
    • Change Rate: Input the percentage (for “Up” or “Down” adjustments) or the actual rate (for “Fixed Rate”).
      • Note: All RBL rates will be affected by this change.

Adjusting Dates

The “Adjust Dates” functionality allows for bulk modification of the start and end dates for RBL rates.

  • Access: Click the Adjust Dates button on the RBL Configuration screen.
  • Fields:
    • Start Date: Enter the new start date for the RBL rates.
    • End Date: Enter the new end date for the RBL rates.

Add/Edit Risk Based Lending Configuration

When adding a new RBL rate or editing an existing one, various fields are available to define the criteria for the rate. Not all fields are mandatory; only those pertinent to the rate being defined need to be completed. For an RBL rate to be available in loan processing, all defined criteria must match the loan being processed.

Fields allow for a range (e.g., “from/to”) or a single specific option.

Loan Criteria

  • Loan Type: Enter a specific loan type or a range of loan types. If left blank, the RBL rate applies to all loan types.
  • Security Code: Enter the security code(s) applicable to this RBL rate.
  • Purpose Code: Enter the purpose code(s) applicable to this RBL rate.
  • Loan Amount: Enter a specific loan amount or a range.
  • Loan to Value: Enter the required loan-to-value (LTV) percentage of collateral.
  • Loan Group: Select the loan group required for this RBL rate.

Credit Card Criteria

  • Card Category: Enter a specific credit card category or a range.
  • Card Type: Select the specific card type.

Collateral Criteria

  • Vehicle Age: Enter the vehicle age or age range (in number of years) if applicable to the RBL rate.

Payment Information Criteria

  • Variable Rate Group: Enter a specific variable rate group or a range.
  • # Payments: Enter the exact number of payments a loan must have to be eligible.
  • Interest Rate: Enter the RBL interest rate that will populate the loan record if selected.
  • Minimum Rate: Enter the lowest possible rate this RBL rate can ever be.
  • Rate Change/Plus/Minus: Indicates the margin defined in the variable rate extension.
  • Payment Method: Indicates the payment method considered for this RBL rate.

Credit Criteria

  • Credit Score: Enter a specific credit score or a range needed for eligibility.
  • Credit Grade: Enter the credit grade(s) required for eligibility.

Date Criteria

  • Start & End Date: Define the date range during which this RBL rate will be active.

Configuring Loan Type for RBL Rate

For RBL to function, each loan type that will utilize it must be configured appropriately.

Accessing Loan Type Configuration

Navigate to Type Configuration through the FLEX Main Menu:

  • System Administration
    • General Configuration
      • Type Configuration

Configuring RBL Options within Loan Type

  1. From the Loan Types tab, select the desired loan type and double-click to edit.
  2. Go to the Controlling Values tab.
  3. Locate the Risk Based Lending section.
  4. Configure the following options:
    • Require Risk Based Rate:
      • Select Yes if RBL is mandatory for this loan type.
      • Note: If set to Yes, a separate RBL rate must be defined for all payment methods.
    • View All Terms:
      • Select Yes to display all terms defined for this loan type from the RBL screen during loan processing.
    • View All Variable Groups:
      • Select Yes to display all variable groups defined for this loan type from the RBL screen during loan processing.
    • View All Payment Methods:
      • Select Yes to display all payment methods defined for this loan type from the RBL screen during loan processing.

Selecting RBL Rate in Loan Application

Once RBL is configured, users can select applicable rates during the loan application process.

Steps to Select RBL Rate

  1. In the Loan Application details screen, navigate to the Payment Info tab.
  2. Click the RBL button. This will display a list of available rates based on the loan details.
  3. Highlight the desired rate from the list.
  4. Click Ok. The selected rate will populate the Payment Info tab in the loan application.
  5. Error Handling: If the loan conditions do not match any available RBL rates, an error message will be displayed when attempting to proceed (e.g., by clicking “Next”).

RBL in Loan Processing

The Risk Based Lending button is also available in the top right corner of the New Loan Entry Screen within Loan Processing, allowing for RBL rate selection during loan disbursement.