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Object documentationExact Renewal

 

When a bank renews the condition fixing on a loan contract at the end of the current condition fixing end and the new condition fixing takes immediate effect, this is referred to as “exact renewal”.

There are 2 possible scenarios with exact renewal:

  • The new condition fixing period falls within the last loan agreement period.

  • The new condition fixing period extends beyond the last loan agreement period.

Through product customizing, you can enable or disable the extension of the agreement period. If the new condition fixing period extends beyond the last loan agreement period, the agreement extends until the end of the new condition fixing period (provided that agreement extension is enabled for the product in Customizing).

Example

Consider the following loan contract:

Loan contract details

Date(s)

Current condition fixing period:

Jan 1, 2007 to Jan 1, 2008

Individual condition 1:

Jan 1, 2007 to Oct 30, 2007

Individual condition 2:

Jan 1, 2007 to Jan 1, 2008

Individual condition 3:

Jan 1, 2008 to Feb 1, 2009

Individual condition 4:

Dec 1, 2007 to Jan 1, 2009

Date of renewal:

Jan 1, 2008

New condition fixing period:

Jan 1, 2008 to Jan 1, 2009

With exact renewal, all individual conditions that are valid on the start date of the new condition fixing period, that is, on Jan 1, 2008, are proposed for inclusion in the new condition fixing. Therefore, only individual conditions 2 and 4 are proposed at renewal. Individual condition 1, which ends before the start date of the new condition fixing period, is not proposed at renewal. Individual condition 3, which is valid after the start date of the new condition fixing period, is deleted.

The following two figures illustrate the exact renewal scenarios: