What is early repayment charge in SAP FS-AM - Account Management?

SAP Term: early repayment charge

• Component: FS-AM

• Component Name: Account Management

• Description: An amount debited from the borrower's account by the bank for any early repayments made. The bank can impose the early repayment charge on the borrower in the following two ways: If the early repayment limit is exceeded Regardless of whether the early repayment limit is exceeded

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• Key Concepts: 
  Early repayment charge is a fee that is charged when a customer pays off a loan before the end of the loan term. This fee is calculated based on the remaining balance of the loan and the amount of time left in the loan term. It is used to compensate the lender for lost interest income. In SAP FS-AM Account Management, early repayment charge is calculated automatically and can be viewed in the customer's account details. 
  
  How to use it: 
  In SAP FS-AM Account Management, early repayment charge can be calculated automatically when a customer pays off their loan before the end of the loan term. To do this, go to the customer's account details and select “Calculate Early Repayment Charge”. This will generate an estimate of the early repayment charge that will be applied to the customer's account. 
  
  Tips & Tricks: 
  When calculating early repayment charge, it is important to consider any applicable discounts or incentives that may be available to the customer. These discounts or incentives may reduce or even eliminate the early repayment charge, so it is important to factor them into your calculations. 
  
  Related Information: 
  For more information on early repayment charge in SAP FS-AM Account Management, please refer to SAP Help documentation at https://help.sap.com/viewer/product/FS_AM/2020_05_500/en-US/f9f8d7a3c2b14e6f9a7d3c2b1e8f5d6a.html