Include advancements in APR

We have added a new property at the Advancement Category level that allows advancements to be included in a loan’s APR calculation. When “Include In APR” is enabled, all advancements in that category are factored into the APR calculation. Previously, the APR calculation only included the initial disbursement (i.e., original loan amount) and scheduled payments from that amount.

How can I use it?

If you offer multi-disbursement products, you can use this feature to include all loan disbursements in the APR calculation.

Where can I find it?

You can access and configure this feature in two ways:

In the LMS: Navigate to Settings > Loan > Labeling > Advancement Categories. From there, you can create categories and decide which ones have “Include in APR” enabled. Learn more about Advancements.

Via LoanPro’s API Calculator: Provide a list of advancement categories via the AdvanceCategory object and define their respective "Include in APR" settings—1 if enabled, 0 if disabled—in your request body. Learn more about LoanPro’s API Calculator.

How APR calculations work in LMS vs. API

• In the LMS: To update an APR calculation after adding an advancement, the account must be inactivated. Active loan accounts will not automatically recalculate the APR when new advancements are added.
• Via the API Calculator: The API Calculator operates independently of the LMS. Since it requires a payload containing all loan details to be included in every API call, it can calculate the APR at any time—regardless of whether a loan is activated or inactivated in the LMS.

How can I test it?

Follow these steps to test the feature’s functionality within the UI:

1. Access Settings > Loan > Labeling > Advancement Categories.
2. Make sure at least one advancement category has the “Include In APR” toggle enabled and one category does not.
3. Create a new loan, define the setup terms, and Activate the account. Take note of the initial APR.
4. Within the new loan account, navigate to Account Setup > Setup Tools > Advance/Credit > Advancements to add an advancement that is in a category with “Include In APR” disabled.
5. View Account Setup > Setup Terms > Inactivate > Save & Calculate to compare the APR to the recorded value in step three. Expected Result: The APR should stay the same.
6. Activate the loan account again and change the advancement category to one that has “Include In APR” enabled.
7. Inactivate the account and click Save & Calculate to see the updated APR.
   • Expected Result: The APR is different.