• Version 1.0

• Prepared by: @Lorraine Sebata

• Approved by: @Nocyia Saunders

• Reviewed date: 2025-09-03

• Next review date: 2026-09-03

1. Purpose

This SOP outlines the step-by-step process for calculating the Debt Service Ratio (DSR) from a client's payslip and adjusting it to achieve a target of 25% for TOP UP loan applications, where the monthly repayment remains the same. The purpose is to ensure consistent and compliant assessment of a client's repayment capacity and adherence to lending policies.

2. Scope

This SOP applies to all Operations Managers, Loan Officers, and any other staff involved in the financial assessment and approval of TOP UP loan applications at Easy Terms.

3. Related Policies

• Credit and Loan Approval Policy

• Online Loan Application Process SOP

4. Roles and Responsibilities

• Loan Officer: Responsible for collecting the client's payslip and initial review of financial documents.

• Operations Manager: Primary responsible for calculating the DSR, identifying discrepancies, and recommending adjustments to meet the 25% target.

5. Procedure: Debt Service Ratio (DSR) Calculation and Adjustment

5.1 Data Collection (Loan Officer)

• 5.1.1 Obtain the most recent and complete payslip from the client applying for a TOP UP loan.

• 5.1.2 Ensure the payslip clearly shows all monthly debt payments and gross income.

5.2 Calculation of Total Monthly Debt Payments (Operations Manager)

• 5.2.1 Identify and sum all recurring monthly debt payments listed on the payslip. This includes, but is not limited to:

  • Mortgage or rent payments

  • Car loans

  • Credit card payments

  • Student loans

  • Any other outstanding debts or regular financial obligations.

• 5.2.2 Record the "Total Monthly Debt Payments."

5.3 Calculation of Total Monthly Gross Income (Operations Manager)

• 5.3.1 Identify and sum all sources of monthly gross income listed on the payslip. This includes:

  • Wages/Salary

  • Bonuses (if regular and verifiable)

  • Commissions (if regular and verifiable)

  • Any other consistent sources of income.

• 5.3.2 Record the "Total Monthly Gross Income."

5.4 Verification and Documentation (Operations Manager)

• 5.4.1 Verify the accuracy of all calculations and ensure all figures are correctly extracted from the payslip.

• 5.4.2 Document the final DSR calculation, including any adjustments made and the rationale behind them, in the client's credit appraisal report and the Loan Management System (LMS).

• 5.4.3 Confirm that the DSR is successfully at 25% before proceeding with the TOP UP loan application.

6. Documentation and Forms

• Client Payslip

• Credit Appraisal Report

• Loan Management System (LMS) records

7. Training

All Operations Managers and Loan Officers will receive mandatory training on this SOP and related policies annually or upon significant revisions to ensure consistent application of DSR calculation and adjustment procedures.

8. Review and Revision

This SOP will be reviewed annually by the Finance and Operations Departments to ensure its continued effectiveness, compliance with lending policies, and alignment with business objectives.