Setting Up Loans

This chapter provides an overview loans and delivered loan elements and discusses how to enter loan data.

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Malaysia. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 8.9 PeopleBook.

Understanding Loans

Many Malaysian organizations offer loans to meet the short-term and long-term needs of their payees. The loan is recovered by the organization over a period of time, through periodic installments that are deducted from the payroll. Global Payroll for Malaysia enables you to process loan payments, and monitor and process loan repayments.

Three types of loan deductions that are delivered as sample data are:

Home loans (LN DEDUCT 2)

These loans are used to purchase or construct a house, or to improve existing property.
Car loans (LN DEDUCT 3)

These loans are used to purchase new or used cars.
Company loans (LN DEDUCT 1)

These loans are used to purchase consumer goods, or to pay for education or weddings.

Global Payroll for Malaysia enables you to:

Define different types of loans.
Define repayment schedules based on loan type.
Deduct loan repayments according to the loan schedule.
Apply a straight-line interest calculation.
Update loan balances as repayments are made.
Provide loan and interest balances.
Modify the loan recovery schedule.

Understanding Delivered Loan Elements

Global Payroll for Malaysia uses the following array, formulas, variables, and deductions to process loans:

LN AR DATA (loan data) array.

This array reads and stores the information that is entered on the Payee Loans Data page.
LN FM LNMGMNT (loan management) formula.

This formula determines whether the current payment is the final loan installment, applies the loan deduction, and updates the loan accumulator. It is also used to calculate interest.
LN VR DED1 (company loan) variable, LN VR DED2 (housing loan) variable, and LN VR DED3 (car loan) variable.

The system uses these variables to calculate the amount to deduct for each loan.
LN DEDUCT 1 (company loan) deduction, LN DEDUCT 2 (housing loan) deduction, and LN DEDUCT 3 (car loan) deduction.

The system uses these deductions to hold the loan payment amounts.

During loan processing, the system uses the loan elements to:

Read the data that is on the Payee Loans Data page using the array LN AR DATA.
Determine whether this is the final loan repayment by using the formula LN FM LNMGMNT.
Determine the amount of the current loan repayment using the formula LN FM LNMGMNT.
Create the loan deduction by moving the value from the formula LN FM LNMGMNT to the variables LN VR DED1, LN VR DED2, OR LN VR DED3.
Update the loan accumulator.

Entering Loan Data

The Global Payroll for Malaysia loans feature assumes that you have a process to request and approve loans. When the details are agreed upon, the system can monitor the payment of the loan to the employee and the repayment of the loan balance to the employer.

This section discusses how to enter loan data.

Page Used to Enter Loan Data

Page Name	Object Name	Navigation	Usage
Request Loans MYS	GPMY_LN_PYE	Global Payroll & Absence Mgmt, Payee Data, Loans, Request Loans MYS	Enter and update payee loan data.

Entering Loan Data

Access the Request Loans MYS page.

Effective Date and End Date

Enter dates to set the loan duration.

Note. Any change in the repayment schedule requires a new instance on this page. Overriding the loan deductions elsewhere results in an error.

Loan Code

Enter a description of the loan. Used with the sequence number to identify the loan.

Sequence Number

Enter the sequence number for the loan code.

Loan Total Amount

Enter the total amount of the loan.

Interest Percentage

Enter the agreed annual interest percentage. The system uses the number of installments to calculate when the loan is recovered. It then applies a percentage that is equal to the interest percentage that is multiplied by the duration of the loan in years. If you enter a value in this field, you must use the Number of Installments field.

Installment Amount

Select the amount that is to be deducted per loan installment. You may use either the Installment Amount field or the Number of Installments field, not both. If the installment amount exceeds the outstanding balance, only the outstanding balance is recovered.

Element Name

Select the variable containing the loan type.

Number of Installments

Indicate the number of installments that are used to recover the loan. If you enter Installment Amount, you do not enter the number of installments.

Frequency ID

Specify the repayment frequency to which the installment amount is related or the units that the Number of Installments field uses.

Effective Date and End Date	Enter dates to set the loan duration. Note. Any change in the repayment schedule requires a new instance on this page. Overriding the loan deductions elsewhere results in an error.
Loan Code	Enter a description of the loan. Used with the sequence number to identify the loan.
Sequence Number	Enter the sequence number for the loan code.
Loan Total Amount	Enter the total amount of the loan.
Interest Percentage	Enter the agreed annual interest percentage. The system uses the number of installments to calculate when the loan is recovered. It then applies a percentage that is equal to the interest percentage that is multiplied by the duration of the loan in years. If you enter a value in this field, you must use the Number of Installments field.
Installment Amount	Select the amount that is to be deducted per loan installment. You may use either the Installment Amount field or the Number of Installments field, not both. If the installment amount exceeds the outstanding balance, only the outstanding balance is recovered.
Element Name	Select the variable containing the loan type.
Number of Installments	Indicate the number of installments that are used to recover the loan. If you enter Installment Amount, you do not enter the number of installments.
Frequency ID	Specify the repayment frequency to which the installment amount is related or the units that the Number of Installments field uses.