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

SAP Term: early repayment limit

• Component: FS-AM

• Component Name: Account Management

• Description: The maximum amount a borrower can repay on a loan in excess of the scheduled repayments. This amount is tolerated by the lender without imposing an early repayment charge. An early repayment limit comprises a granted limit the limit communicated to the customer and a tolerated limit a supplementary limit not communicated to the customer.

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• Key Concepts: 
  Early repayment limit is a feature of the FS-AM Account Management component of SAP. It allows users to set a limit on the amount of money that can be repaid early on a loan or other financial instrument. This limit helps to ensure that the loan is repaid in full and on time, and helps to protect the lender from potential losses due to early repayment. 
  
  How to use it: 
  To use the early repayment limit feature, users must first set up the limit in the FS-AM Account Management component. This can be done by entering the desired limit amount in the “Early Repayment Limit” field. Once this is done, any payments made on the loan or other financial instrument that exceed this limit will be rejected. 
  
  Tips & Tricks: 
  It is important to remember that the early repayment limit only applies to payments made on the loan or other financial instrument. Any payments made outside of this instrument, such as payments made directly to the lender, will not be subject to the early repayment limit. 
  
  Related Information: 
  For more information about setting up and using the early repayment limit feature in FS-AM Account Management, please refer to SAP’s official documentation.