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How do I create and pay an employee loan?
How do I create and pay an employee loan?

Pay and recover an employee loan via XPayroll

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Written by XPayroll
Updated over a year ago

Here's a quick guide on how to pay an employee loan via XPayroll.

Step 1

Go to the left nav bar under Pay Employees > Loans

Step 2

Click on ADD NEW LOAN

Step 3

Enter all relevant loan related details here.

Employee name, loan name, loan amount, Interest type, Rate of Interest, Perquisite Rate, loan duration.

Step 4

Click ADD TO PENDING LOANS

Step 5

Click on DISBURSE LOANS to pay the loan.

Interest Types

We support two Interest types

  1. Flat Interest

    Interest is calculated on the entire initial loan amount, regardless of payments made by the employee. This means the employee's interest remains consistent throughout the loan's duration since it's always based on the original borrowed amount.

  2. Reducing Interest

    Interest is calculated only on the remaining balance of the loan, which decreases after each EMI payment. As the employee repays more of the loan, the interest charged becomes less because it's based on a smaller amount.

Perquisite %

  1. Perquisite % is calculated as the difference between the SBI interest rate and the interest rate your organisation will give.
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  2. For example, if the SBI rate of interest is 13% and the interest rate of the loan you are giving is 9%, perquisite percentage input should be 4%.
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  3. The final addition in the taxable income will be basis the tax-bracket, the employee falls in.

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