Interest Charges

A transaction will be made from the user's loan node (<<account_loanUS>>) to a platform node designated at loan creation, indicating interest accrual. This will cause the loan account to go further negative. If there is an agreed APR split between Synapse and you, a percentage of the transaction will be distributed to Synapse.

APR

When we integrate your loan program, we will (depending on factors including your use case and customer base) define the maximum APR in your spec sheet (we won't allow for predatory rates). At loan creation, you will have the option to set the APR from 0% up to your maximum APR.

Alternative to Charging Interest

For one-time loans, your platform also has the option to charge a flat fee (info.flat_fee) instead of charging interest (e.g. for microlending).

Please note that loans you offer under a flat fee structure must charge 0% APR (i.e. set "info.interest.apr": 0) and must adhere to the following fee limits:

Statement Cycles

One-Time Loans

If using AutoPay payment will be due on the next_payment date each month. Please refer to AutoPay.

Revolving Loans

Statement cycles start on the first of the month and end on the last day of the month. The monthly statement for the previous cycle is generated on the 1st of the following month and then delivered on the 7th of that month (referred to as the "statement delivery date"). Regulatory requirements set a minimum 21-day grace period until the payment is due (the "statement payment due date"). Under normal conditions, the statement payment due date is set for the last day of the month (e.g. February 28th, October 31st, etc.). However, if statement generation is delayed for any reason the 21-day grace period should still be respected.

Cap Amount and Total Amount for Loans

The cap amount will be the most the user will ever have to pay in interest for that loan. We will define this value depending on your use case and the nature of your users. When creating a loan you will have the option to define the cap amount of that loan in between 0% and your platform's max cap amount. The total amount for a loan is the maximum that a user will have to pay over the life of a loan, and is simply the principal amount plus the cap amount. Users will never be liable to pay more than the principal plus the cap amount, regardless of how many payments are missed.

How the Monetary Value of the Cap Amount is Calculated per Loan

The cap amount is calculated as a percentage of the principal loan amount but delivered to the end user as a monetary value. For example, if an end user has a $100 loan with an APR of 10% and cap of 40%, then the interest will only accrue up to 40% of $100 principal amount (i.e. $40), and no more.

Note on Late Payments

We do not charge late payment fees. The most a user will have to pay in interest charges over the life of a loan is the cap amount. However, if the user pays a loan off early, they will end up paying less than the cap amount. This setup incentivizes the user to pay earlier so that they do not have to pay the cap amount but also does not overly penalize users for paying late. This setup also clarifies to the user up-front that the only fee to "worry about" is the loan APR and sets a clear expectation for the maximum amount of interest they would pay in the worst case scenario.

How Interest Accrues for One-Time Loans

• Interest will be calculated and defined at the moment of the user’s loan approval, and will accrue and compound daily against the outstanding balance based on the APR set for the loan node.

How Interest Accrues for Revolving Loans

Like standard credit cards, revolving lines do not charge interest if the total statement balance is paid on or before the statement payment due date (e.g. before the end of the month following the statement cycle). The statement cycle starts on the first day of the month and ends on the last day of the month. Refer to Statement Cycle for Revolving Loans (above) for more details.

The statement balance is the balance at the end of the statement cycle (i.e. the balance on the last day of the month). Interest will start to accrue for the statement balance at the beginning of the next statement cycle (i.e. the next day, which will be the first day of the month). Interest will not be charged if the statement balance is paid on the statement payment due date, but the user will owe any accrued interest for any balance remaining after the statement payment due date.

The next statement balance will include any withdrawals and payments made in that month, as well as any unpaid balance from previous months plus the unpaid accrued interest for that month. Once the statement cycle ends, the new statement balance is defined and this amount will be owed. This means that if the new statement balance is paid in full by the statement payment due date, no interest will be owed.

Example

• At the close of a statement cycle, the statement balance at the end of the month is -$500.
  • This means that if the statement is delivered on the 7th of the next month, the user would be responsible for paying the -$500 statement balance in full by the end of the month to avoid paying interest charges on that balance.
  • Please keep in mind that interest will start to accrue on the -$500 statement balance immediately. If payment is made after the grace period (i.e. at or past the end of the month), the user will have to pay all of the accrued interest for the statement balance from the beginning of the current month.
  • If the user makes a partial payment before the statement payment due date (i.e. before month-end), the payment will count towards the statement balance due and the user will be responsible for paying the interest accrued on the remaining amount.