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Payment waterfall

When a payment arrives, Loanly applies it across the amounts a loan owes in a fixed priority order — the waterfall. Each incoming amount fills higher-priority buckets first, then spills into the next.

Default order​

The product's PaymentWaterfall sets the order; the default is:

  1. Penalty — default interest / penalty accrued on overdue amounts.
  2. Interest — billed interest.
  3. Fee — transaction and other fees.
  4. Principal — the outstanding balance.

So a payment first clears any penalty, then interest, then fees, and only what's left reduces principal. Anything beyond what's owed is recorded as unapplied (available credit).

How allocation is recorded​

Every payment stores an allocation breakdown — how much went to each bucket — so the Payments tab can show exactly where the money landed:

  • applied to principal / interest / fees / penalty / default interest, and
  • any unapplied remainder.

This breakdown is append-only alongside the value-dated ledger, so the split is auditable and the outstanding balance stays reproducible. See the Payments tab.

Prepayment vs. a normal payment​

A normal payment runs the waterfall against what's currently due. A prepayment is different: it's an extra principal payment that curtails the balance and then re-amortizes the remaining schedule on the lower balance (a new calculation). See Loan lifecycle.