Prorating your Loan

Prorating your loan is necessary when the closing date of your loan, and the date of your first payment do not fall on the same dates as your payment frequency.  For example, if you make your loan on the 15th of the month and expect your borrower to pay you on the first day of every month, you can’t expect the borrower to pay for 30 days of interest on the 1st of the month following the closing date of the loan.  In this case, you would charge only half the interest for the first 15 days of the loan.  You are prorating the interest for the first 15 days of the loan to allow you to get the loan on a 1st of the month payment schedule.  Prorating correctly ensures that both the borrower and the lender pay their fair share for the initial abbreviated payment period.

Bryt allows you to calculate and collect this payment either on the closing date or with the first payment.

Bryt allows you to enter a manual prorate amount or the system will calculate the prorate amount for you.  When Bryt calculates the prorate amount for you, it multiplies the number of days in your prorated payment period by your Per Diem or Daily Interest. 

Example:

Bryt Prorate Settings

Prorate the first period:

• Choose “No” if you do not need to prorate the loan. Choosing “No” will make the closing date the start of the first payment period.
• Choose “Yes” to prorate the loan.
  • For the auto-calculate option, the system will calculate the prorate amount according to the daily interest rate times the number of days in the prorate period.
  • If you want to charge an amount that is different than this, choose the manual option.

Ending Date of the Prorate Period:
This is the last day of the prorate period. The next day will start the first full payment period.

Note: If you'd like your payment due dates to align with the first of each month (yet have a prorate), you'll want to enter the ending date of the prorated period the day just before the 1st of the following month (on monthly payment frequency loans).
Example: With a closing date of 1/17/23, we'll want to enter 1/31/23 to get due dates aligning with the first of each month - 2/1/23, 3/1/23, etc. 

Collect First Prorate Payment:

• If you choose to collect your prorate payment at closing, the system will calculate the prorate amount as a separate payment.
• If you choose to collect your prorate payment with your first payment, the system will add the prorated amount to the borrower's first payment.
• If you choose to collect your prorate payment at the end of the prorate period, the system will collect that prorate amount at the end of the prorate period.

Note: The difference between collecting the prorate amount at closing or at the end of the prorate period is the due date the system will generate for the loan schedule.

At closing - will set the payment's due date to the closing date the loan was set at.
Example: A closing date of 6/27, end of prorate is set for 6/30, but the due date would be 6/27.

At the End of the Prorate Period - will use the day following the last day of the prorate that was entered.
Example: A closing date of 6/27, end of prorate is set for 6/30, so the due date would be 7/1.

With the First Payment - makes the prorate period show $0 due in interest but adds the interest owed to the first full pay period instead.
Example: This option will make the auto-calculated or manually set interest due amount to be due and payable with the first full pay period. 

Manual Prorate Amount (Only appears when selecting the 'Manual Prorate Amount' Option): Enter the amount that you want to charge for the prorate period if you do not want the system to auto-calculate this amount.

Enter the Principal Due with Prorate Payment: This is an available option when selecting either the auto-calculate or manual prorate options, to set a designated principal due amount for the prorate period. This will affect the first pay period's projected ending balance. 

End Date of the Ending Prorate Period: To learn more about the Ending Prorate's options, please click here.