Managing employee loans with automatic payroll deductions.

I built this loan management module from the ground up, focusing on accuracy in financial calculations and seamless integration with payroll. The biggest challenge was getting the math right—loan amortization, interest calculations, early payment adjustments—while keeping everything auditable.

I designed the database schema to track every loan transaction, from application to final payment. I implemented the amortization calculator that generates repayment schedules based on loan amount, interest rate, and tenure. The system automatically calculates monthly deductions and updates loan balances.

The integration with payroll was crucial. When payroll runs, the system automatically deducts loan repayments and updates outstanding balances. No manual intervention. I also integrated with the approval workflow for loan applications, meaning loan requests go through proper approval chains before disbursement.

Financial systems have zero tolerance for errors. When you're dealing with people's money—loans, repayments, interest—every calculation must be exact. A rounding error of 1 cent multiplied across 1,000 loans becomes a real problem.

And loans are complex. Different loan types have different rules. Some have interest, others don't. Some allow early repayment, others have penalties. Some employees want to pay extra, others want to defer. The system needed to handle all these scenarios.

For employees: They wanted transparency. How much do I owe? When will my loan be paid off? Can I see my repayment schedule? Can I pay extra this month?

For HR/Finance: They needed control and accuracy. Approve loans based on salary multiples. Track outstanding balances. Generate reports for audits. Ensure repayments happen automatically through payroll.

For the organization: They needed risk management. Who's eligible for loans? What are the limits? How do we handle employees who leave with outstanding loans?

The technical reality: We needed precise financial calculations, amortization schedules, integration with payroll for automatic deductions, integration with approval workflows, and complete transaction history for audits.

I used decimal types throughout for financial calculations—no floating point arithmetic that could introduce rounding errors. Every monetary value is a decimal, every calculation is precise.

The amortization calculator: I implemented the loan amortization algorithm that generates complete repayment schedules. Given a loan amount, interest rate, and tenure, it calculates exact monthly payments including principal and interest breakdown. The algorithm handles both reducing balance and flat rate interest methods.

Payroll integration: This was critical. When payroll runs, the system queries active loans, calculates current month's deduction, and updates loan balances. The integration is transactional—if payroll fails, loan updates rollback. No partial states.

Early payment handling: Employees can pay extra towards their loans. The system recalculates remaining tenure or adjusts monthly payments based on configuration. All recalculations maintain the same precision standards.

Approval workflow integration: Loan applications go through the approval workflow before disbursement. Once approved, loans are activated and deductions begin automatically from the next payroll cycle.