Managing Loan Types
Create and configure loan types to define lending policies.
Loan types define the categories of loans your company offers, along with the terms, limits, and eligibility rules for each. Before any loan can be issued, at least one loan type must be configured. This page explains how to view, create, edit, and manage loan types.
Navigation: Finance > Loan > Loan Types
Purpose
Different lending scenarios require different rules. A short-term salary advance has very different terms from a large vehicle repair loan. Loan types allow you to:
- Define distinct categories of loans with their own maximum amounts and tenures
- Set default interest rates for each category
- Establish eligibility criteria to control who can borrow and how much
- Standardize lending policies across the organization
Loan types determine the limits and terms available when creating a new loan. Set appropriate maximums based on your company policy.
Viewing Loan Types
The Loan Types page displays a table of all configured loan types with the following columns:
| Column | Description |
|---|---|
| Name | The loan type name (e.g., Salary Advance, Emergency Loan) |
| Max Amount | The maximum amount (AED) that can be loaned under this type |
| Max Tenure | The maximum repayment period in months |
| Interest Rate | The default annual interest rate |
| Status | Whether the loan type is Active or Inactive |
Creating a New Loan Type
To create a new loan type:
- Navigate to Finance > Loan > Loan Types.
- Click the "Add Loan Type" button.
- Fill out the following fields:
Name
Enter a clear, descriptive name for the loan type. This name appears in the dropdown when creating a loan, so choose something your team will recognize immediately.
Good examples: "Salary Advance", "Emergency Loan", "Vehicle Repair Loan", "Personal Loan"
Maximum Amount
Set the highest amount (in AED) that can be loaned under this type. When a user creates a loan and selects this type, the loan amount cannot exceed this value.
Maximum Tenure
Set the maximum repayment period in months. This limits how long a borrower can take to repay a loan of this type.
Default Interest Rate
Set the annual interest rate as a percentage. Enter 0 for interest-free loan types (such as salary advances). This rate is pre-filled when creating a loan but can be adjusted on a per-loan basis.
Eligibility Rules (Optional)
Configure additional eligibility criteria to control who qualifies for this loan type:
- Minimum employment period -- Require the borrower to have been employed for a minimum number of months before they can apply.
- Maximum concurrent loans -- Limit the number of active loans a single borrower can have at the same time.
Description
Enter a brief description explaining the purpose of this loan type and any relevant policies. This helps other finance team members understand when to use each type.
Save
Click Save to create the loan type. It becomes immediately available in the loan creation form.
Editing a Loan Type
To modify an existing loan type:
- Navigate to Finance > Loan > Loan Types.
- Click on the loan type row to open its details.
- Update any of the fields -- name, maximum amount, maximum tenure, interest rate, eligibility rules, or description.
- Click Save to apply the changes.
Changes to a loan type affect only future loans. Existing loans retain the terms that were set when they were originally created.
Deactivating a Loan Type
If a loan type is no longer needed, you can deactivate it rather than deleting it. Deactivated loan types:
- Do not appear in the dropdown when creating new loans
- Remain in the system for historical reference
- Can be reactivated at any time if needed
Loan types that have active loans associated with them cannot be deleted. You must deactivate them instead, which preserves the integrity of existing loan records.
Common Loan Types for Fleet Management
Here are typical loan types used in fleet and transportation businesses:
Salary Advance
A short-term, interest-free advance on the borrower's upcoming salary. Ideal for employees or drivers who need quick access to a portion of their next paycheck.
- Typical Max Amount: 1 month's salary
- Typical Tenure: 1--3 months
- Interest Rate: 0%
Emergency Loan
For unexpected personal emergencies such as medical expenses or family needs. Offers a moderate amount with flexible repayment terms.
- Typical Max Amount: Varies by company policy
- Typical Tenure: 3--12 months
- Interest Rate: 0% or low rate
Vehicle Repair Loan
Specifically for drivers who need to cover vehicle repair costs. The amount varies depending on the nature of the repair.
- Typical Max Amount: Based on average repair costs
- Typical Tenure: 3--6 months
- Interest Rate: 0%
Fine Conversion Loan
Auto-created when a traffic fine or other penalty is converted into a loan for the responsible driver. The terms are set during the conversion process rather than manually configured.
- Max Amount: Based on the fine amount
- Tenure: Set during fine conversion
- Interest Rate: Typically 0%
Best Practices
- Name clearly -- Use names that your team will immediately understand. Avoid abbreviations or internal codes.
- Set reasonable limits -- Maximum amounts and tenures should reflect your actual company policies. Setting them too high defeats the purpose of the controls.
- Review periodically -- Revisit your loan types at least quarterly to ensure the terms still align with your company's financial policies and employee needs.
- Use descriptions -- Write clear descriptions for each loan type so that any finance team member can decide which type to use without needing to ask.
- Keep the list manageable -- Aim for a small number of well-defined loan types rather than creating a new type for every situation.