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Asset Finance - V2 Configuration

Product Type: Secured Asset-Based Lending
Use Case: Vehicle purchase, equipment financing, machinery acquisition
Typical Amount: ₦1,000,000 - ₦50,000,000
Typical Tenor: 12-60 months
Interest Rate: 16% - 28% per annum

Overview​

Asset Finance loans are designed for purchasing or financing specific assets (vehicles, equipment, machinery). The asset being financed serves as primary collateral, with Loan-to-Value (LTV) ratios determining the maximum loan amount.

Key Features​

  • Asset as Collateral: Financed asset is primary security
  • LTV-Based Lending: 70-90% of asset value
  • Supplier Payment: Direct payment to asset supplier
  • GPS Tracking: Optional vehicle tracking
  • Balloon Payments: Reduced monthly payments option
  • Asset Insurance Mandatory: Comprehensive coverage required
  • Depreciation Tracking: Asset revaluation over loan life

YAML Field Reference​

Basic Information Section​

Field NameData TypeRequiredDescriptionExample
productCodeString✅ YesUnique product code"AF-VEHICLE-001"
productNameString✅ YesDisplay name"Vehicle Asset Finance"
descriptionStringNoProduct description"Finance for vehicle purchase"
isActiveBooleanNoProduct statustrue
loanProductTypeStringNoLoan type"AssetFinance"
lineOfBusinessEnumNoBusiness classification"Commercial"

Loan Tenure Section​

Field NameData TypeRequiredDescriptionExample
minimumMonthsInteger✅ YesMinimum tenor12
maximumMonthsInteger✅ YesMaximum tenor60
defaultMonthsIntegerNoDefault tenor48

Principal Range Section​

Field NameData TypeRequiredDescriptionExample
minimumAmountDecimalNoMinimum loan amount1000000
maximumAmountDecimalNoMaximum loan amount50000000
defaultAmountDecimalNoDefault amount5000000

Asset Types Configuration​

Field NameData TypeRequiredDescriptionExample
assetTypes[]Array✅ YesSupported asset categoriesSee below
assetTypes[].typeEnum✅ YesAsset type"Vehicle"
assetTypes[].maxLTVDecimal✅ YesMax loan-to-value (%)80
assetTypes[].minAgeIntegerNoMin asset age0
assetTypes[].maxAgeIntegerNoMax asset age5
assetTypes[].depreciationRateDecimalNoAnnual depreciation (%)20
assetTypes[].requireNewAssetBooleanNoOnly new assetsfalse

Asset Type Categories: Vehicle, Equipment, Machinery, Technology, Medical, Agricultural

LTV Configuration Section​

Field NameData TypeRequiredDescriptionExample
ltvSettings.defaultDecimal✅ YesDefault LTV (%)80
ltvSettings.minimumDecimalNoMinimum LTV (%)70
ltvSettings.maximumDecimalNoMaximum LTV (%)90
ltvSettings.byAssetTypeObjectNoLTV by asset categorySee sample
ltvSettings.newAssetBonusDecimalNoExtra LTV for new asset5

Interest Configuration Section​

Field NameData TypeRequiredDescriptionExample
isEnabledBoolean✅ YesWhether interest is chargedtrue
rate.defaultDecimal✅ YesDefault rate (%)22.0
rate.minimumDecimalNoMinimum rate (%)16.0
rate.maximumDecimalNoMaximum rate (%)28.0
calculationMethodEnum✅ YesCalculation method"DecliningBalance"
rateByAssetTypeObjectNoRates per asset typeSee sample

Balloon Payment Configuration​

Field NameData TypeRequiredDescriptionExample
allowBalloonPaymentBooleanNoEnable balloon structuretrue
balloonPercentage.minimumDecimalNoMin balloon (%)10
balloonPercentage.maximumDecimalNoMax balloon (%)40
balloonPercentage.defaultDecimalNoDefault balloon (%)30
balloonDueEnumNoWhen balloon is due"FinalPayment"

Balloon Payment: Large final payment reducing monthly installments.

Supplier Payment Configuration​

Field NameData TypeRequiredDescriptionExample
directSupplierPaymentBooleanNoPay supplier directlytrue
approvedSuppliers[]ArrayNoWhitelisted suppliers[]
requireSupplierInvoiceBooleanNoInvoice mandatorytrue
requireProofOfDeliveryBooleanNoDelivery proof mandatorytrue
allowCustomerDownpaymentBooleanNoCustomer can add equitytrue

GPS Tracking Configuration​

Field NameData TypeRequiredDescriptionExample
requireGPSTrackingBooleanNoMandatory GPS for vehiclestrue
gpsProviderStringNoTracking provider"IntelliTrack"
gpsInstallationFeeDecimalNoInstallation cost50000
monthlyGPSFeeDecimalNoMonthly monitoring fee2500
applyForVehiclesOnlyBooleanNoOnly for vehicle assetstrue

Insurance Configuration Section​

Field NameData TypeRequiredDescriptionExample
requireInsuranceBoolean✅ YesMandatory asset insurancetrue
insuranceTypes[]Array✅ YesRequired coverage types["Comprehensive", "ThirdParty"]
bankAsBeneficiaryBoolean✅ YesBank as loss payeetrue
minimumCoverageDecimalNoMin coverage amount100
renewalRequiredBooleanNoRequire annual renewaltrue

Insurance Types: Comprehensive, ThirdParty, Fire, Theft, AllRisk

Depreciation Tracking Section​

Field NameData TypeRequiredDescriptionExample
trackDepreciationBooleanNoMonitor asset valuetrue
depreciationMethodEnumNoCalculation method"StraightLine" or "DecliningBalance"
annualDepreciationRateDecimalNoDefault rate (%)20
revaluationFrequencyEnumNoRevaluation period"Annual"
requireRevaluationWhenDecimalNoLTV threshold for review100

Eligibility Configuration Section​

Field NameData TypeRequiredDescriptionExample
minimumAgeIntegerNoMinimum age25
maximumAgeIntegerNoMaximum age65
minimumIncomeDecimalNoMinimum monthly income200000
employmentStatus[]ArrayNoAccepted employment["Salaried", "SelfEmployed", "Business"]
requiredDocuments[]Array✅ YesMandatory documentsSee below
kycLevelEnumNoRequired KYC tier"Tier3"

Required Documents for Asset Finance:

requiredDocuments:
  - "ValidID"
  - "ProofOfIncome"
  - "BankStatement6Months"
  - "UtilityBill"
  - "AssetProformaInvoice"
  - "SupplierQuotation"
  - "AssetValuationReport"

Fees Configuration Section​

Field NameData TypeRequiredDescriptionExample
fees[].codeString✅ YesFee code"PROC_FEE"
fees[].nameString✅ YesFee name"Processing Fee"
fees[].feeTypeEnum✅ YesCollection method"DeductedDisbursement"
fees[].calculationTypeEnum✅ YesCalculation type"PercentOfPrincipal"
fees[].valueDecimal✅ YesFee amount/percentage1.5
fees[].minimumDecimalNoMinimum fee20000
fees[].maximumDecimalNoMaximum fee200000
fees[].glAccountIdInteger✅ YesGL account40001

Complete Sample YAML Configuration​

basicInfo:
  productCode: "AF-VEHICLE-001"
  productName: "Vehicle Asset Finance"
  description: "Financing for purchase of new and used vehicles"
  isActive: true
  loanProductType: "AssetFinance"
  repaymentAllocationOrder: "FEES_PENALTY_INTEREST_PRINCIPAL"
  lineOfBusiness: "Commercial"
  currencyCode: "NGN"

loanTenure:
  minimumMonths: 12
  maximumMonths: 60
  defaultMonths: 48

principalRange:
  minimumAmount: 1000000
  maximumAmount: 50000000
  defaultAmount: 5000000

assetTypesConfig:
  - type: "Vehicle"
    maxLTV: 80
    minAge: 0
    maxAge: 5
    depreciationRate: 20
    requireNewAsset: false
  
  - type: "Equipment"
    maxLTV: 75
    minAge: 0
    maxAge: 10
    depreciationRate: 15
    requireNewAsset: false
  
  - type: "Machinery"
    maxLTV: 70
    minAge: 0
    maxAge: 15
    depreciationRate: 10
    requireNewAsset: false

ltvSettings:
  default: 80
  minimum: 70
  maximum: 90
  byAssetType:
    Vehicle:
      new: 85
      used: 75
    Equipment:
      new: 80
      used: 70
    Machinery:
      new: 75
      used: 65
  newAssetBonus: 5

interestConfig:
  isEnabled: true
  rate:
    default: 22.0
    minimum: 16.0
    maximum: 28.0
  calculationMethod: "DecliningBalance"
  deductionMethod: "PaymentDueDate"
  rateTerms: "PerYear"
  rateByAssetType:
    Vehicle: 22.0
    Equipment: 20.0
    Machinery: 18.0

balloonPaymentConfig:
  allowBalloonPayment: true
  balloonPercentage:
    minimum: 10
    maximum: 40
    default: 30
  balloonDue: "FinalPayment"

supplierPaymentConfig:
  directSupplierPayment: true
  approvedSuppliers: []
  requireSupplierInvoice: true
  requireProofOfDelivery: true
  allowCustomerDownpayment: true

gpsTrackingConfig:
  requireGPSTracking: true
  gpsProvider: "IntelliTrack"
  gpsInstallationFee: 50000
  monthlyGPSFee: 2500
  applyForVehiclesOnly: true

insuranceConfig:
  requireInsurance: true
  insuranceTypes:
    - "Comprehensive"
    - "ThirdParty"
  bankAsBeneficiary: true
  minimumCoverage: 100
  renewalRequired: true

depreciationConfig:
  trackDepreciation: true
  depreciationMethod: "StraightLine"
  annualDepreciationRate: 20
  revaluationFrequency: "Annual"
  requireRevaluationWhen: 100

eligibilityConfig:
  minimumAge: 25
  maximumAge: 65
  minimumIncome: 200000
  employmentStatus:
    - "Salaried"
    - "SelfEmployed"
    - "Business"
  requiredDocuments:
    - "ValidID"
    - "ProofOfIncome"
    - "BankStatement6Months"
    - "UtilityBill"
    - "AssetProformaInvoice"
    - "SupplierQuotation"
    - "AssetValuationReport"
  kycLevel: "Tier3"

fees:
  - code: "PROC_FEE"
    name: "Processing Fee"
    feeType: "DeductedDisbursement"
    calculationType: "PercentOfPrincipal"
    value: 1.5
    minimum: 20000
    maximum: 200000
    glAccountId: 40001
  
  - code: "VAL_FEE"
    name: "Asset Valuation Fee"
    feeType: "UpfrontDisbursement"
    calculationType: "Flat"
    value: 25000
    glAccountId: 40002
  
  - code: "GPS_INSTALL"
    name: "GPS Installation"
    feeType: "DeductedDisbursement"
    calculationType: "Flat"
    value: 50000
    glAccountId: 40003

repaymentConfig:
  frequency: "Monthly"
  allocationOrder: "FEES_PENALTY_INTEREST_PRINCIPAL"
  principalCollectionInterval: 1
  firstDueDateOffset: 30

penaltyConfig:
  isEnabled: true
  tolerancePeriod: 5
  calculationMethod: "OverduePrincipal_DaysLate_Rate"
  rate:
    default: 3.0
    minimum: 2.0
    maximum: 5.0

notificationsConfig:
  sendApplicationConfirmation: true
  sendApprovalNotification: true
  sendDisbursementNotification: true
  sendRepaymentReminders: true
  sendInsuranceRenewalReminder: true
  reminderDaysBefore: 7
  channels:
    sms: true
    email: true
    push: false

Use Cases & Examples​

Example 1: New Vehicle Purchase​

Scenario: Customer wants to buy a brand new Toyota Hilux (₦15M).

Customer Profile:

  • Age: 35 years
  • Employment: Salaried (₦500k monthly)
  • Income: ₦500,000/month

Asset Details:

  • Vehicle: New Toyota Hilux
  • Invoice Price: ₦15,000,000
  • Asset Age: 0 years (brand new)

LTV Calculation:

ltvSettings:
  byAssetType:
    Vehicle:
      new: 85  # New vehicle gets higher LTV

Maximum Loan = ₦15M × 85% = ₦12,750,000
Customer Equity = ₦15M - ₦12.75M = ₦2,250,000 (15%)

Loan Structure (48 months, 22% p.a.):

Principal: ₦12,750,000
Tenor: 48 months
Interest Rate: 22% p.a. (Declining Balance)

Monthly Payment ≈ ₦387,000

Total Repayment: ₦18.6M
Total Interest: ₦5.85M

Additional Costs:

Processing Fee (1.5%): ₦191,250
Valuation Fee: ₦25,000
GPS Installation: ₦50,000
Insurance (Annual): ₦300,000

Total Upfront: ₦2,816,250 (equity + fees)
Net to Supplier: ₦15,000,000

Example 2: Used Equipment with Balloon Payment​

Scenario: Business needs to buy used printing equipment.

Asset Details:

  • Equipment: Industrial Printer
  • Market Value: ₦8,000,000
  • Asset Age: 3 years

LTV Calculation:

ltvSettings:
  byAssetType:
    Equipment:
      used: 70

Maximum Loan = ₦8M × 70% = ₦5,600,000
Customer Equity = ₦2,400,000 (30%)

Balloon Payment Structure:

balloonPaymentConfig:
  balloonPercentage: 30  # 30% balloon

Principal: ₦5,600,000
Balloon Amount: ₦5.6M × 30% = ₦1,680,000
Financed Amount: ₦5.6M - ₦1.68M = ₦3,920,000
Tenor: 36 months
Interest Rate: 20%

Reduced Monthly Payment: ₦148,000 (vs ₦208,000 without balloon)

Month 1-35: ₦148,000
Month 36: ₦148,000 + ₦1,680,000 = ₦1,828,000 (Balloon due)

Benefits:

  • Lower monthly payments: ✅
  • Improved cash flow: ✅
  • Large final payment: ⚠️ (plan ahead)

Example 3: Asset with Depreciation Tracking​

Scenario: Vehicle financed for 5 years with annual depreciation.

Configuration:

depreciationConfig:
  trackDepreciation: true
  depreciationMethod: "StraightLine"
  annualDepreciationRate: 20

Asset Value Tracking:

Year 0: ₦10,000,000 (Purchase)
Year 1: ₦8,000,000  (20% depreciation)
Year 2: ₦6,000,000  (20% depreciation)
Year 3: ₦4,000,000  (20% depreciation)
Year 4: ₦2,000,000  (20% depreciation)
Year 5: ₦0          (Fully depreciated)

Loan Balance vs Asset Value:
Year 0: Loan ₦8M / Asset ₦10M = 80% LTV ✅
Year 2: Loan ₦4.8M / Asset ₦6M = 80% LTV ✅
Year 4: Loan ₦1.6M / Asset ₦2M = 80% LTV ✅

LTV remains healthy throughout loan life.

Revaluation Trigger:

If LTV exceeds 100% (loan > asset value):
  → Require asset revaluation
  → May need additional collateral
  → Risk of negative equity

LTV Calculation Deep Dive​

Loan-to-Value (LTV) is the ratio of loan amount to asset value.

ltvSettings:
  maximum: 90

Formula:

LTV = (Loan Amount / Asset Value) × 100

Example:
  Asset Value: ₦10,000,000
  Loan Amount: ₦8,000,000
  LTV = (₦8M / ₦10M) × 100 = 80%

Risk Levels:

  • LTV ≤ 70%: ✅✅ Low risk (high equity cushion)
  • LTV 71-80%: ✅ Moderate risk (standard)
  • LTV 81-90%: ⚠️ Higher risk (low equity)
  • LTV > 90%: ❌ Very high risk (underwater loan)

New vs Used Assets:

byAssetType:
  Vehicle:
    new: 85  # Higher LTV for new
    used: 75  # Lower LTV for used

Rationale:

  • New assets depreciate faster initially
  • Used assets have established value
  • More risk with new asset depreciation

Balloon Payment Calculation​

balloonPaymentConfig:
  allowBalloonPayment: true
  balloonPercentage:
    default: 30

Example:

Principal: ₦10,000,000
Tenor: 36 months
Interest: 20% p.a.
Balloon: 30%

Without Balloon:
  Monthly Payment: ₦372,000
  Total Repayment: ₦13.4M

With 30% Balloon:
  Balloon Amount: ₦3,000,000
  Financed: ₦7,000,000
  Monthly Payment: ₦260,000 (30% reduction)
  Month 36: ₦260,000 + ₦3,000,000 = ₦3,260,000
  Total Repayment: ₦12.36M

Savings: Lower monthly burden, better cash flow
Risk: Must plan for large final payment

Balloon Payment Options at Maturity:

  1. Pay Full Balloon: Clear loan completely
  2. Refinance Balloon: Convert to new loan
  3. Sell Asset: Use proceeds to pay balloon
  4. Trade-In: Upgrade to new asset

GPS Tracking Requirements​

gpsTrackingConfig:
  requireGPSTracking: true
  gpsProvider: "IntelliTrack"
  applyForVehiclesOnly: true

Purpose:

  • Asset location monitoring
  • Theft prevention and recovery
  • Usage pattern tracking
  • Repossession assistance

Cost Structure:

GPS Installation: ₦50,000 (one-time)
Monthly Monitoring: ₦2,500

Over 48 months:
  Installation: ₦50,000
  Monitoring: ₦2,500 × 48 = ₦120,000
  Total GPS Cost: ₦170,000

Features:

  • Real-time location tracking
  • Geo-fencing alerts
  • Movement notifications
  • Engine immobilization (remote)
  • Tamper alerts

Insurance Requirements​

insuranceConfig:
  requireInsurance: true
  insuranceTypes:
    - "Comprehensive"
  bankAsBeneficiary: true

Required Coverage:

Comprehensive Insurance:
  - Collision damage
  - Theft
  - Fire
  - Third-party liability
  - Natural disasters

Minimum Coverage: 100% of asset value

Bank as Beneficiary:
  - Bank is loss payee
  - Claims paid to bank first
  - Protects loan balance

Annual Insurance Cost (approx):

Asset Value: ₦10,000,000
Insurance Rate: 3-5% annually
Annual Premium: ₦300,000 - ₦500,000
Monthly Cost: ₦25,000 - ₦42,000

Total Monthly Obligation:
  Loan Payment: ₦372,000
  Insurance: ₦42,000
  GPS Monitoring: ₦2,500
  Total: ₦416,500

Supplier Payment Process​

supplierPaymentConfig:
  directSupplierPayment: true
  requireSupplierInvoice: true
  requireProofOfDelivery: true

Payment Flow:

1. Customer selects asset
   ├─> Supplier provides proforma invoice
   └─> Customer applies for loan

2. Loan Approval
   ├─> Verify supplier credentials
   ├─> Confirm asset specifications
   └─> Approve loan amount

3. Disbursement
   ├─> Customer pays equity (20%)
   ├─> Bank pays supplier directly (80%)
   └─> Collect supplier invoice and receipt

4. Asset Delivery
   ├─> Supplier delivers asset to customer
   ├─> Customer signs proof of delivery
   └─> Bank receives delivery confirmation

5. Post-Disbursement
   ├─> GPS installation (vehicles)
   ├─> Insurance activation
   └─> Asset registration in bank's name

Why Direct Payment?

  • Ensures fund utilization for intended asset
  • Reduces risk of fund diversion
  • Verifies asset purchase and delivery
  • Simplifies documentation

Validation Rules​

LTV Validation​

Code Removed

Implementation details removed for security.

Contact support for implementation guidance.

Asset Age Validation​

Code Removed

Implementation details removed for security.

Contact support for implementation guidance.

Insurance Validation​

Code Removed

Implementation details removed for security.

Contact support for implementation guidance.

Troubleshooting​

Issue: "LTV exceeds maximum"​

Cause: Requested loan amount too high relative to asset value.

Solutions:

Asset Value: ₦10,000,000
Requested Loan: ₦9,000,000
LTV: 90%
Max LTV: 80%

Option 1: Reduce Loan Amount
  New Loan: ₦8,000,000 (80% LTV) ✅
  Customer Equity: ₦2,000,000

Option 2: Increase Asset Value
  Choose higher-value asset: ₦11,250,000
  Loan: ₦9,000,000 (80% LTV) ✅

Option 3: Provide Additional Collateral
  Asset: ₦10M
  Additional Collateral: ₦2M property
  Combined: ₦12M
  LTV: ₦9M / ₦12M = 75% ✅

Issue: "Asset too old"​

Cause: Asset age exceeds maximum for asset type.

Solution:

assetTypesConfig:
  - type: "Vehicle"
    maxAge: 5
Asset: 2015 Vehicle (9 years old)
Max Age: 5 years
Status: ❌ REJECTED

Options:
1. Choose newer asset (≤ 5 years old)
2. Apply under different product (Personal Loan)
3. Request exception review (unlikely)

Issue: "Balloon payment too high"​

Cause: Customer uncomfortable with large final payment.

Solutions:

Original Structure:
  Principal: ₦10M
  Balloon: 40% (₦4M)
  Monthly: ₦223,000
  Final Payment: ₦4,223,000 ⚠️

Solution 1: Reduce Balloon Percentage
  Balloon: 20% (₦2M)
  Monthly: ₦298,000 (higher)
  Final Payment: ₦2,298,000 ✅

Solution 2: Remove Balloon
  Balloon: 0%
  Monthly: ₦372,000 (highest)
  Final Payment: ₦372,000 ✅

Solution 3: Refinance Plan at Maturity
  Keep 40% balloon
  At month 36: Refinance balloon over 12 months
  New Monthly: ₦358,000

Migration from V1​

V1 Asset Finance Mapping​

V1 Field/TableV2 YAML Path
AssetTypeassetTypesConfig[].type
LoanToValueRatioltvSettings.maximum
BalloonPaymentPercentageballoonPaymentConfig.balloonPercentage
GPSRequiredgpsTrackingConfig.requireGPSTracking
InsuranceRequiredinsuranceConfig.requireInsurance
DepreciationRatedepreciationConfig.annualDepreciationRate

Last Updated: January 2, 2026
API Version: V2 (BPMCore)
Product Category: Loan Products
Complexity: ⭐⭐⭐⭐ (Complex - Asset Specific)