FINERACT-2181: Introduce Loop guard to avoid endless loops

fineract-core/src/main/java/org/apache/fineract/util/LoopContext.java

@@ -0,0 +1,21 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements. See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership. The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License. You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied. See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+package org.apache.fineract.util;
+
+public interface LoopContext {}

fineract-core/src/main/java/org/apache/fineract/util/LoopGuard.java

@@ -0,0 +1,56 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements. See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership. The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License. You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied. See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+package org.apache.fineract.util;
+
+import java.util.function.Predicate;
+
+/**
+ * Loop Guard is a utility solution to avoid endless loops
+ *
+ * Example: LoopGuard.runSafeDoWhileLoop(500, () -> { // loop body }, () -> conditions() );
+ */
+public final class LoopGuard {
+
+    private LoopGuard() {}
+
+    public interface LoopBody<T extends LoopContext> {
+
+        void execute(T context);
+    }
+
+    public static <T extends LoopContext> void runSafeDoWhileLoop(int maxIterations, T context, Predicate<T> condition, LoopBody<T> body) {
+        int count = 0;
+        do {
+            if (++count > maxIterations) {
+                throw new IllegalStateException("Loop exceeded " + maxIterations + " iterations. Possible infinite loop.");
+            }
+            body.execute(context);
+        } while (condition.test(context));
+    }
+
+    public static <T extends LoopContext> void runSafeWhileLoop(int maxIterations, T context, Predicate<T> condition, LoopBody<T> body) {
+        int count = 0;
+        while (condition.test(context)) {
+            if (++count > maxIterations) {
+                throw new IllegalStateException("Loop exceeded " + maxIterations + " iterations. Possible infinite loop.");
+            }
+            body.execute(context);
+        }
+    }
+}

fineract-core/src/test/java/org/apache/fineract/util/LoopGuardTest.java

@@ -0,0 +1,134 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements. See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership. The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License. You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied. See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+package org.apache.fineract.util;
+
+import java.util.concurrent.atomic.AtomicInteger;
+import java.util.function.Predicate;
+import org.junit.jupiter.api.Assertions;
+import org.junit.jupiter.api.Test;
+import org.junit.jupiter.params.ParameterizedTest;
+import org.junit.jupiter.params.provider.CsvSource;
+
+public class LoopGuardTest {
+
+    static class TestContext implements LoopContext {
+
+        int iteration;
+    }
+
+    @ParameterizedTest
+    // target value, max iterations
+    @CsvSource({ "3, 5", //
+            "5, 6", //
+            "2, 10", //
+            "2, 2", //
+    })
+    void testSafeDoWhileLoopExecutesCorrectly(int targetValue, int maxIterations) {
+        TestContext context = new TestContext();
+
+        Predicate<TestContext> condition = ctx -> ctx.iteration < targetValue;
+        LoopGuard.LoopBody<TestContext> body = ctx -> ctx.iteration++;
+
+        LoopGuard.runSafeDoWhileLoop(maxIterations, context, condition, body);
+
+        Assertions.assertEquals(targetValue, context.iteration);
+    }
+
+    @ParameterizedTest
+    // target value, max iterations
+    @CsvSource({ "2, 5", //
+            "4, 5", //
+            "6, 10", //
+            "2, 2" //
+    })
+    void testSafeWhileLoopExecutesCorrectly(int targetValue, int maxIterations) {
+        TestContext context = new TestContext();
+
+        Predicate<TestContext> condition = ctx -> ctx.iteration < targetValue;
+        LoopGuard.LoopBody<TestContext> body = ctx -> ctx.iteration++;
+
+        LoopGuard.runSafeWhileLoop(maxIterations, context, condition, body);
+
+        Assertions.assertEquals(targetValue, context.iteration);
+    }
+
+    @ParameterizedTest
+    // max iterations
+    @CsvSource({ "10", //
+            "5", //
+            "1", //
+            "0", //
+            "-1" //
+    })
+    void testSafeDoWhileLoopThrowsOnExceedingMaxIterations(int maxIterations) {
+        TestContext context = new TestContext();
+
+        Predicate<TestContext> condition = ctx -> true; // infinite
+        LoopGuard.LoopBody<TestContext> body = ctx -> ctx.iteration++;
+
+        IllegalStateException exception = Assertions.assertThrows(IllegalStateException.class,
+                () -> LoopGuard.runSafeDoWhileLoop(maxIterations, context, condition, body));
+
+        Assertions.assertTrue(exception.getMessage().contains("Loop exceeded " + maxIterations));
+    }
+
+    @ParameterizedTest
+    // max iterations
+    @CsvSource({ "10", //
+            "3", //
+            "2" //
+    })
+    void testSafeWhileLoopThrowsOnExceedingMaxIterations(int maxIterations) {
+        TestContext context = new TestContext();
+
+        Predicate<TestContext> condition = ctx -> true; // infinite
+        LoopGuard.LoopBody<TestContext> body = ctx -> ctx.iteration++;
+
+        IllegalStateException exception = Assertions.assertThrows(IllegalStateException.class,
+                () -> LoopGuard.runSafeWhileLoop(maxIterations, context, condition, body));
+
+        Assertions.assertTrue(exception.getMessage().contains("Loop exceeded " + maxIterations));
+    }
+
+    @Test
+    void testSafeDoWhileLoopRunsAtLeastOnce() {
+        TestContext context = new TestContext();
+        AtomicInteger counter = new AtomicInteger();
+
+        Predicate<TestContext> condition = ctx -> false;
+        LoopGuard.LoopBody<TestContext> body = ctx -> counter.incrementAndGet();
+
+        LoopGuard.runSafeDoWhileLoop(3, context, condition, body);
+
+        Assertions.assertEquals(1, counter.get(), "Do-while loop should execute at least once");
+    }
+
+    @Test
+    void testSafeWhileLoopSkipsIfConditionFalseInitially() {
+        TestContext context = new TestContext();
+        AtomicInteger counter = new AtomicInteger();
+
+        Predicate<TestContext> condition = ctx -> false;
+        LoopGuard.LoopBody<TestContext> body = ctx -> counter.incrementAndGet();
+
+        LoopGuard.runSafeWhileLoop(3, context, condition, body);
+
+        Assertions.assertEquals(0, counter.get(), "While loop should skip execution if condition is false");
+    }
+}

fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java

@@ -103,6 +103,8 @@ import org.apache.fineract.portfolio.loanproduct.domain.FutureInstallmentAllocat
 import org.apache.fineract.portfolio.loanproduct.domain.LoanPreCloseInterestCalculationStrategy;
 import org.apache.fineract.portfolio.loanproduct.domain.LoanProductRelatedDetail;
 import org.apache.fineract.portfolio.loanproduct.domain.PaymentAllocationType;
+import org.apache.fineract.util.LoopContext;
+import org.apache.fineract.util.LoopGuard;
 import org.springframework.transaction.annotation.Propagation;
 import org.springframework.transaction.annotation.Transactional;
 
@@ -858,7 +860,6 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
         List<LoanTransaction> remainingTransactions = new ArrayList<>(overpaidTransactions);
         MonetaryCurrency currency = ctx.getCurrency();
         MoneyHolder overpaymentHolder = ctx.getOverpaymentHolder();
-        Set<LoanCharge> charges = ctx.getCharges();
         Money zero = Money.zero(currency);
         for (LoanTransaction transaction : overpaidTransactions) {
             Money overpayment = transaction.getOverPaymentPortion(currency);
@@ -880,7 +881,7 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
             List<LoanTransactionToRepaymentScheduleMapping> transactionMappings = new ArrayList<>();
             Balances balances = new Balances(zero, zero, zero, zero);
 
-            Money unprocessed = processPeriods(processTransaction, processAmount, charges, transactionMappings, balances, ctx);
+            Money unprocessed = processPeriods(processTransaction, processAmount, transactionMappings, balances, ctx);
 
             processTransaction.setOverPayments(MathUtil.plus(overpayment, unprocessed));
             overpaymentHolder.setMoneyObject(MathUtil.plus(ctxOverpayment, unprocessed));
@@ -1139,8 +1140,8 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
             Money zero = Money.zero(currency);
             Balances balances = new Balances(zero, zero, zero, zero);
             LoanPaymentAllocationRule defaultAllocationRule = getDefaultAllocationRule(loanTransaction.getLoan());
-            Money transactionAmountUnprocessed = processPeriods(loanTransaction, overpayment, defaultAllocationRule, Set.of(),
+            Money transactionAmountUnprocessed = processPeriods(loanTransaction, overpayment, defaultAllocationRule, transactionMappings,
-                    transactionMappings, balances, transactionCtx);
+                    balances, transactionCtx);
 
             overpaymentHolder.setMoneyObject(transactionAmountUnprocessed);
             loanTransaction.updateLoanTransactionToRepaymentScheduleMappings(transactionMappings);
@@ -1609,164 +1610,198 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
     private Money refundTransactionHorizontally(LoanTransaction loanTransaction, TransactionCtx ctx, Money transactionAmountUnprocessed,
             List<PaymentAllocationType> paymentAllocationTypes, FutureInstallmentAllocationRule futureInstallmentAllocationRule,
             List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances) {
-        MonetaryCurrency currency = ctx.getCurrency();
+        HorizontalPaymentAllocationContext paymentAllocationContext = new HorizontalPaymentAllocationContext(ctx, loanTransaction,
-        Money zero = Money.zero(currency);
+                paymentAllocationTypes, futureInstallmentAllocationRule, transactionMappings, balances);
-        List<LoanRepaymentScheduleInstallment> installments = ctx.getInstallments();
+        paymentAllocationContext.setTransactionAmountUnprocessed(transactionAmountUnprocessed);
-        Set<LoanCharge> charges = ctx.getCharges();
-        Money refundedPortion;
-        outerLoop: do {
-            LoanRepaymentScheduleInstallment latestPastDueInstallment = getLatestPastDueInstallmentForRefund(loanTransaction, currency,
-                    installments, zero);
-            LoanRepaymentScheduleInstallment dueInstallment = getDueInstallmentForRefund(loanTransaction, currency, installments, zero);
 
-            List<LoanRepaymentScheduleInstallment> inAdvanceInstallments = getFutureInstallmentsForRefund(loanTransaction, currency,
+        LoopGuard.runSafeDoWhileLoop(paymentAllocationContext.getCtx().getInstallments().size() * 100, //
-                    installments, futureInstallmentAllocationRule, zero);
+                paymentAllocationContext, //
+                (HorizontalPaymentAllocationContext context) -> !context.isExitCondition()
+                        && context.getCtx().getInstallments().stream()
+                                .anyMatch(installment -> installment.getTotalPaid(context.getCtx().getCurrency()).isGreaterThanZero())
+                        && context.getTransactionAmountUnprocessed().isGreaterThanZero(), //
+                context -> {
+                    LoanRepaymentScheduleInstallment latestPastDueInstallment = getLatestPastDueInstallmentForRefund(
+                            context.getLoanTransaction(), context.getCtx().getCurrency(), context.getCtx().getInstallments());
+                    LoanRepaymentScheduleInstallment dueInstallment = getDueInstallmentForRefund(context.getLoanTransaction(),
+                            context.getCtx().getCurrency(), context.getCtx().getInstallments());
 
-            int firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper.fetchFirstNormalInstallmentNumber(installments);
+                    List<LoanRepaymentScheduleInstallment> inAdvanceInstallments = getFutureInstallmentsForRefund(
-            for (PaymentAllocationType paymentAllocationType : paymentAllocationTypes) {
+                            context.getLoanTransaction(), context.getCtx().getCurrency(), context.getCtx().getInstallments(),
+                            context.getFutureInstallmentAllocationRule());
+
+                    int firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper
+                            .fetchFirstNormalInstallmentNumber(context.getCtx().getInstallments());
+                    for (PaymentAllocationType paymentAllocationType : context.getPaymentAllocationTypes()) {
                         switch (paymentAllocationType.getDueType()) {
                             case PAST_DUE -> {
                                 if (latestPastDueInstallment != null) {
-                            Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(charges, latestPastDueInstallment,
+                                    Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(
-                                    firstNormalInstallmentNumber);
+                                            context.getCtx().getCharges(), latestPastDueInstallment, firstNormalInstallmentNumber);
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, latestPastDueInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), latestPastDueInstallment,
-                            refundedPortion = processPaymentAllocation(paymentAllocationType, latestPastDueInstallment, loanTransaction,
+                                            context.getCtx().getCurrency());
-                                    transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping,
+                                    context.setAllocatedAmount(processPaymentAllocation(paymentAllocationType, latestPastDueInstallment,
-                                    oldestPastDueInstallmentCharges, balances, LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
+                                            context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(refundedPortion);
+                                            loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges,
+                                            context.getBalances(), LoanRepaymentScheduleInstallment.PaymentAction.UNPAY));
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                 } else {
-                            break outerLoop;
+                                    context.setExitCondition(true);
                                 }
                             }
                             case DUE -> {
                                 if (dueInstallment != null) {
-                            Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(charges, dueInstallment,
+                                    Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(context.getCtx().getCharges(),
-                                    firstNormalInstallmentNumber);
+                                            dueInstallment, firstNormalInstallmentNumber);
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, dueInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), dueInstallment,
-                            refundedPortion = processPaymentAllocation(paymentAllocationType, dueInstallment, loanTransaction,
+                                            context.getCtx().getCurrency());
-                                    transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges,
+                                    context.setAllocatedAmount(processPaymentAllocation(paymentAllocationType, dueInstallment,
-                                    balances, LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
+                                            context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(refundedPortion);
+                                            loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges, context.getBalances(),
+                                            LoanRepaymentScheduleInstallment.PaymentAction.UNPAY));
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                 } else {
-                            break outerLoop;
+                                    context.setExitCondition(true);
                                 }
                             }
                             case IN_ADVANCE -> {
                                 int numberOfInstallments = inAdvanceInstallments.size();
                                 if (numberOfInstallments > 0) {
-                            Money evenPortion = transactionAmountUnprocessed.dividedBy(numberOfInstallments, MoneyHelper.getMathContext());
+                                    Money evenPortion = context.getTransactionAmountUnprocessed().dividedBy(numberOfInstallments,
-                            Money balanceAdjustment = transactionAmountUnprocessed.minus(evenPortion.multipliedBy(numberOfInstallments));
+                                            MoneyHelper.getMathContext());
+                                    Money balanceAdjustment = context.getTransactionAmountUnprocessed()
+                                            .minus(evenPortion.multipliedBy(numberOfInstallments));
                                     for (LoanRepaymentScheduleInstallment inAdvanceInstallment : inAdvanceInstallments) {
-                                Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(charges, inAdvanceInstallment,
+                                        Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(
-                                        firstNormalInstallmentNumber);
+                                                context.getCtx().getCharges(), inAdvanceInstallment, firstNormalInstallmentNumber);
                                         if (inAdvanceInstallment.equals(inAdvanceInstallments.get(numberOfInstallments - 1))) {
                                             evenPortion = evenPortion.add(balanceAdjustment);
                                         }
                                         LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                        transactionMappings, loanTransaction, inAdvanceInstallment, currency);
+                                                context.getTransactionMappings(), context.getLoanTransaction(), inAdvanceInstallment,
-                                refundedPortion = processPaymentAllocation(paymentAllocationType, inAdvanceInstallment, loanTransaction,
+                                                context.getCtx().getCurrency());
-                                        evenPortion, loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges, balances,
+                                        context.setAllocatedAmount(processPaymentAllocation(paymentAllocationType, inAdvanceInstallment,
-                                        LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
+                                                context.getLoanTransaction(), evenPortion, loanTransactionToRepaymentScheduleMapping,
-                                transactionAmountUnprocessed = transactionAmountUnprocessed.minus(refundedPortion);
+                                                inAdvanceInstallmentCharges, context.getBalances(),
+                                                LoanRepaymentScheduleInstallment.PaymentAction.UNPAY));
+                                        context.setTransactionAmountUnprocessed(
+                                                context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                     }
                                 } else {
-                            break outerLoop;
+                                    context.setExitCondition(true);
                                 }
                             }
                         }
                     }
-        } while (installments.stream().anyMatch(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+                });
-                && transactionAmountUnprocessed.isGreaterThanZero());
+        return paymentAllocationContext.getTransactionAmountUnprocessed();
-        return transactionAmountUnprocessed;
     }
 
     private Money refundTransactionVertically(LoanTransaction loanTransaction, TransactionCtx ctx,
             List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Money transactionAmountUnprocessed,
             FutureInstallmentAllocationRule futureInstallmentAllocationRule, Balances balances,
             PaymentAllocationType paymentAllocationType) {
-        MonetaryCurrency currency = ctx.getCurrency();
+        VerticalPaymentAllocationContext paymentAllocationContext = new VerticalPaymentAllocationContext(ctx, loanTransaction,
-        Money zero = Money.zero(currency);
+                futureInstallmentAllocationRule, transactionMappings, balances);
-        Money refundedPortion = zero;
+        paymentAllocationContext.setTransactionAmountUnprocessed(transactionAmountUnprocessed);
-        List<LoanRepaymentScheduleInstallment> installments = ctx.getInstallments();
+        paymentAllocationContext.setPaymentAllocationType(paymentAllocationType);
-        Set<LoanCharge> charges = ctx.getCharges();
+        LoopGuard.runSafeDoWhileLoop(paymentAllocationContext.getCtx().getInstallments().size() * 100, //
-        LoanRepaymentScheduleInstallment currentInstallment = null;
+                paymentAllocationContext, //
-        int firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper.fetchFirstNormalInstallmentNumber(installments);
+                (VerticalPaymentAllocationContext context) -> context.getInstallment() != null
-        do {
+                        && context.getTransactionAmountUnprocessed().isGreaterThanZero()
-            switch (paymentAllocationType.getDueType()) {
+                        && context.getAllocatedAmount().isGreaterThanZero(), //
+                context -> {
+                    switch (context.getPaymentAllocationType().getDueType()) {
                         case PAST_DUE -> {
-                    currentInstallment = getLatestPastDueInstallmentForRefund(loanTransaction, currency, installments, zero);
+                            context.setInstallment(getLatestPastDueInstallmentForRefund(context.getLoanTransaction(),
-                    if (currentInstallment != null) {
+                                    context.getCtx().getCurrency(), context.getCtx().getInstallments()));
-                        Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(charges, currentInstallment,
+                            if (context.getInstallment() != null) {
-                                firstNormalInstallmentNumber);
+                                Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(context.getCtx().getCharges(),
+                                        context.getInstallment(), context.getFirstNormalInstallmentNumber());
                                 LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                transactionMappings, loanTransaction, currentInstallment, currency);
+                                        context.getTransactionMappings(), context.getLoanTransaction(), context.getInstallment(),
-                        refundedPortion = processPaymentAllocation(paymentAllocationType, currentInstallment, loanTransaction,
+                                        context.getCtx().getCurrency());
-                                transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges,
+                                context.setAllocatedAmount(processPaymentAllocation(context.getPaymentAllocationType(),
-                                balances, LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
+                                        context.getInstallment(), context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
-                        transactionAmountUnprocessed = transactionAmountUnprocessed.minus(refundedPortion);
+                                        loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges, context.getBalances(),
+                                        LoanRepaymentScheduleInstallment.PaymentAction.UNPAY));
+                                context.setTransactionAmountUnprocessed(
+                                        context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                             }
                         }
                         case DUE -> {
-                    currentInstallment = getDueInstallmentForRefund(loanTransaction, currency, installments, zero);
+                            context.setInstallment(getDueInstallmentForRefund(context.getLoanTransaction(), context.getCtx().getCurrency(),
-                    if (currentInstallment != null) {
+                                    context.getCtx().getInstallments()));
-                        Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(charges, currentInstallment,
+                            if (context.getInstallment() != null) {
-                                firstNormalInstallmentNumber);
+                                Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(context.getCtx().getCharges(),
+                                        context.getInstallment(), context.getFirstNormalInstallmentNumber());
                                 LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                transactionMappings, loanTransaction, currentInstallment, currency);
+                                        context.getTransactionMappings(), context.getLoanTransaction(), context.getInstallment(),
-                        refundedPortion = processPaymentAllocation(paymentAllocationType, currentInstallment, loanTransaction,
+                                        context.getCtx().getCurrency());
-                                transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges, balances,
+                                context.setAllocatedAmount(processPaymentAllocation(context.getPaymentAllocationType(),
-                                LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
+                                        context.getInstallment(), context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
-                        transactionAmountUnprocessed = transactionAmountUnprocessed.minus(refundedPortion);
+                                        loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges, context.getBalances(),
+                                        LoanRepaymentScheduleInstallment.PaymentAction.UNPAY));
+                                context.setTransactionAmountUnprocessed(
+                                        context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                             }
                         }
                         case IN_ADVANCE -> {
-                    List<LoanRepaymentScheduleInstallment> currentInstallments = getFutureInstallmentsForRefund(loanTransaction, currency,
+                            List<LoanRepaymentScheduleInstallment> currentInstallments = getFutureInstallmentsForRefund(
-                            installments, futureInstallmentAllocationRule, zero);
+                                    context.getLoanTransaction(), context.getCtx().getCurrency(), context.getCtx().getInstallments(),
+                                    context.getFutureInstallmentAllocationRule());
                             int numberOfInstallments = currentInstallments.size();
-                    refundedPortion = zero;
+                            context.setAllocatedAmount(Money.zero(context.getCtx().getCurrency()));
                             if (numberOfInstallments > 0) {
-                        Money evenPortion = transactionAmountUnprocessed.dividedBy(numberOfInstallments, MoneyHelper.getMathContext());
+                                Money evenPortion = context.getTransactionAmountUnprocessed().dividedBy(numberOfInstallments,
-                        Money balanceAdjustment = transactionAmountUnprocessed.minus(evenPortion.multipliedBy(numberOfInstallments));
+                                        MoneyHelper.getMathContext());
+                                Money balanceAdjustment = context.getTransactionAmountUnprocessed()
+                                        .minus(evenPortion.multipliedBy(numberOfInstallments));
                                 for (LoanRepaymentScheduleInstallment internalCurrentInstallment : currentInstallments) {
-                            currentInstallment = internalCurrentInstallment;
+                                    context.setInstallment(internalCurrentInstallment);
-                            Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(charges, currentInstallment,
+                                    Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(context.getCtx().getCharges(),
-                                    firstNormalInstallmentNumber);
+                                            context.getInstallment(), context.getFirstNormalInstallmentNumber());
                                     if (internalCurrentInstallment.equals(currentInstallments.get(numberOfInstallments - 1))) {
                                         evenPortion = evenPortion.add(balanceAdjustment);
                                     }
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, currentInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), context.getInstallment(),
-                            Money internalUnpaidPortion = processPaymentAllocation(paymentAllocationType, currentInstallment,
+                                            context.getCtx().getCurrency());
-                                    loanTransaction, evenPortion, loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges,
+                                    Money internalUnpaidPortion = processPaymentAllocation(context.getPaymentAllocationType(),
-                                    balances, LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
+                                            context.getInstallment(), context.getLoanTransaction(), evenPortion,
+                                            loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges, context.getBalances(),
+                                            LoanRepaymentScheduleInstallment.PaymentAction.UNPAY);
                                     if (internalUnpaidPortion.isGreaterThanZero()) {
-                                refundedPortion = internalUnpaidPortion;
+                                        context.setAllocatedAmount(internalUnpaidPortion);
                                     }
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(internalUnpaidPortion);
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(internalUnpaidPortion));
                                 }
                             } else {
-                        currentInstallment = null;
+                                context.setInstallment(null);
                             }
                         }
                     }
-        } while (currentInstallment != null && transactionAmountUnprocessed.isGreaterThanZero() && refundedPortion.isGreaterThanZero());
+                });
-        return transactionAmountUnprocessed;
+        return paymentAllocationContext.getTransactionAmountUnprocessed();
     }
 
     @Nullable
     private static LoanRepaymentScheduleInstallment getDueInstallmentForRefund(LoanTransaction loanTransaction, MonetaryCurrency currency,
-            List<LoanRepaymentScheduleInstallment> installments, Money zero) {
+            List<LoanRepaymentScheduleInstallment> installments) {
-        return installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+        return installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                 .filter(installment -> loanTransaction.isOn(installment.getDueDate()))
                 .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null);
     }
 
     @Nullable
     private static LoanRepaymentScheduleInstallment getLatestPastDueInstallmentForRefund(LoanTransaction loanTransaction,
-            MonetaryCurrency currency, List<LoanRepaymentScheduleInstallment> installments, Money zero) {
+            MonetaryCurrency currency, List<LoanRepaymentScheduleInstallment> installments) {
-        return installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+        return installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                 .filter(e -> loanTransaction.isAfter(e.getDueDate()))
                 .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null);
     }
@@ -1774,28 +1809,28 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
     @NotNull
     private static List<LoanRepaymentScheduleInstallment> getFutureInstallmentsForRefund(LoanTransaction loanTransaction,
             MonetaryCurrency currency, List<LoanRepaymentScheduleInstallment> installments,
-            FutureInstallmentAllocationRule futureInstallmentAllocationRule, Money zero) {
+            FutureInstallmentAllocationRule futureInstallmentAllocationRule) {
         List<LoanRepaymentScheduleInstallment> inAdvanceInstallments = new ArrayList<>();
         if (FutureInstallmentAllocationRule.REAMORTIZATION.equals(futureInstallmentAllocationRule)) {
-            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                     .filter(e -> loanTransaction.isBefore(e.getDueDate())).toList();
         } else if (FutureInstallmentAllocationRule.NEXT_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
-            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                     .filter(e -> loanTransaction.isBefore(e.getDueDate()))
                     .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream().toList();
         } else if (FutureInstallmentAllocationRule.LAST_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
-            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                     .filter(e -> loanTransaction.isBefore(e.getDueDate()))
                     .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream().toList();
         } else if (FutureInstallmentAllocationRule.NEXT_LAST_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
             // try to resolve as current installment ( not due )
-            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+            inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                     .filter(e -> loanTransaction.isBefore(e.getDueDate())).filter(f -> loanTransaction.isAfter(f.getFromDate())
                             || (loanTransaction.isOn(f.getFromDate()) && f.getInstallmentNumber() == 1))
                     .toList();
             // if there is no current installment, resolve similar to LAST_INSTALLMENT
             if (inAdvanceInstallments.isEmpty()) {
-                inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThan(zero))
+                inAdvanceInstallments = installments.stream().filter(installment -> installment.getTotalPaid(currency).isGreaterThanZero())
                         .filter(e -> loanTransaction.isBefore(e.getDueDate()))
                         .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream().toList();
             }
@@ -1807,8 +1842,8 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
         List<LoanTransactionToRepaymentScheduleMapping> transactionMappings = new ArrayList<>();
         Money zero = Money.zero(transactionCtx.getCurrency());
         Balances balances = new Balances(zero, zero, zero, zero);
-        transactionAmountUnprocessed = processPeriods(loanTransaction, transactionAmountUnprocessed, transactionCtx.getCharges(),
+        transactionAmountUnprocessed = processPeriods(loanTransaction, transactionAmountUnprocessed, transactionMappings, balances,
-                transactionMappings, balances, transactionCtx);
+                transactionCtx);
 
         loanTransaction.updateComponents(balances.getAggregatedPrincipalPortion(), balances.getAggregatedInterestPortion(),
                 balances.getAggregatedFeeChargesPortion(), balances.getAggregatedPenaltyChargesPortion());
@@ -1817,31 +1852,28 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
         handleOverpayment(transactionAmountUnprocessed, loanTransaction, transactionCtx);
     }
 
-    private Money processPeriods(LoanTransaction transaction, Money processAmount, Set<LoanCharge> charges,
+    private Money processPeriods(LoanTransaction transaction, Money processAmount,
             List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances, TransactionCtx transactionCtx) {
         LoanPaymentAllocationRule allocationRule = getAllocationRule(transaction);
-        return processPeriods(transaction, processAmount, allocationRule, charges, transactionMappings, balances, transactionCtx);
+        return processPeriods(transaction, processAmount, allocationRule, transactionMappings, balances, transactionCtx);
     }
 
     private Money processPeriods(LoanTransaction transaction, Money processAmount, LoanPaymentAllocationRule allocationRule,
-            Set<LoanCharge> charges, List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances,
+            List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances, TransactionCtx transactionCtx) {
-            TransactionCtx transactionCtx) {
         LoanScheduleProcessingType scheduleProcessingType = transaction.getLoan().getLoanProductRelatedDetail()
                 .getLoanScheduleProcessingType();
         if (scheduleProcessingType.isHorizontal()) {
-            return processPeriodsHorizontally(transaction, transactionCtx, processAmount, allocationRule, transactionMappings, charges,
+            return processPeriodsHorizontally(transaction, transactionCtx, processAmount, allocationRule, transactionMappings, balances);
-                    balances);
         }
         if (scheduleProcessingType.isVertical()) {
-            return processPeriodsVertically(transaction, transactionCtx, processAmount, allocationRule, transactionMappings, charges,
+            return processPeriodsVertically(transaction, transactionCtx, processAmount, allocationRule, transactionMappings, balances);
-                    balances);
         }
         return processAmount;
     }
 
     private Money processPeriodsHorizontally(LoanTransaction loanTransaction, TransactionCtx transactionCtx,
             Money transactionAmountUnprocessed, LoanPaymentAllocationRule paymentAllocationRule,
-            List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Set<LoanCharge> charges, Balances balances) {
+            List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances) {
         LinkedHashMap<DueType, List<PaymentAllocationType>> paymentAllocationsMap = paymentAllocationRule.getAllocationTypes().stream()
                 .collect(Collectors.groupingBy(PaymentAllocationType::getDueType, LinkedHashMap::new,
                         mapping(Function.identity(), toList())));
@@ -1849,180 +1881,205 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
         for (Map.Entry<DueType, List<PaymentAllocationType>> paymentAllocationsEntry : paymentAllocationsMap.entrySet()) {
             transactionAmountUnprocessed = processAllocationsHorizontally(loanTransaction, transactionCtx, transactionAmountUnprocessed,
                     paymentAllocationsEntry.getValue(), paymentAllocationRule.getFutureInstallmentAllocationRule(), transactionMappings,
-                    charges, balances);
+                    balances);
         }
         return transactionAmountUnprocessed;
     }
 
-    private Money processAllocationsHorizontally(LoanTransaction loanTransaction, TransactionCtx transactionCtx,
+    private Money processAllocationsHorizontally(LoanTransaction loanTransaction, TransactionCtx ctx, Money transactionAmountUnprocessed,
-            Money transactionAmountUnprocessed, List<PaymentAllocationType> paymentAllocationTypes,
+            List<PaymentAllocationType> paymentAllocationTypes, FutureInstallmentAllocationRule futureInstallmentAllocationRule,
-            FutureInstallmentAllocationRule futureInstallmentAllocationRule,
+            List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances) {
-            List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Set<LoanCharge> charges, Balances balances) {
         if (MathUtil.isEmpty(transactionAmountUnprocessed)) {
             return transactionAmountUnprocessed;
         }
-
+        HorizontalPaymentAllocationContext paymentAllocationContext = new HorizontalPaymentAllocationContext(ctx, loanTransaction,
-        MonetaryCurrency currency = transactionCtx.getCurrency();
+                paymentAllocationTypes, futureInstallmentAllocationRule, transactionMappings, balances);
-        List<LoanRepaymentScheduleInstallment> installments = transactionCtx.getInstallments();
+        paymentAllocationContext.setTransactionAmountUnprocessed(transactionAmountUnprocessed);
-        Money paidPortion;
-        boolean exit = false;
-        Predicate<LoanRepaymentScheduleInstallment> inAdvanceInstallmentsFilteringRules;
         boolean interestBearingAndInterestRecalculationEnabled = loanTransaction.getLoan()
                 .isInterestBearingAndInterestRecalculationEnabled();
-        boolean isProgressiveCtx = transactionCtx instanceof ProgressiveTransactionCtx;
+        boolean isProgressiveCtx = ctx instanceof ProgressiveTransactionCtx;
 
         if (isProgressiveCtx && interestBearingAndInterestRecalculationEnabled) {
-            ProgressiveTransactionCtx ctx = (ProgressiveTransactionCtx) transactionCtx;
+            ProgressiveTransactionCtx progressiveTransactionCtx = (ProgressiveTransactionCtx) ctx;
             // Clear any previously skipped installments before re-evaluating
-            ctx.getSkipRepaymentScheduleInstallments().clear();
+            progressiveTransactionCtx.getSkipRepaymentScheduleInstallments().clear();
-
+            paymentAllocationContext
-            inAdvanceInstallmentsFilteringRules = installment -> loanTransaction.isBefore(installment.getDueDate())
+                    .setInAdvanceInstallmentsFilteringRules(installment -> loanTransaction.isBefore(installment.getDueDate())
-                    && (installment.isNotFullyPaidOff()
+                            && (installment.isNotFullyPaidOff() || (installment.isDueBalanceZero()
-                            || (installment.isDueBalanceZero() && !ctx.getSkipRepaymentScheduleInstallments().contains(installment)));
+                                    && !progressiveTransactionCtx.getSkipRepaymentScheduleInstallments().contains(installment))));
         } else {
-            inAdvanceInstallmentsFilteringRules = installment -> loanTransaction.isBefore(installment.getDueDate())
+            paymentAllocationContext.setInAdvanceInstallmentsFilteringRules(
-                    && installment.isNotFullyPaidOff();
+                    installment -> loanTransaction.isBefore(installment.getDueDate()) && installment.isNotFullyPaidOff());
         }
-
+        LoopGuard.runSafeDoWhileLoop(paymentAllocationContext.getCtx().getInstallments().size() * 100, //
-        do {
+                paymentAllocationContext, //
-            LoanRepaymentScheduleInstallment oldestPastDueInstallment = installments.stream()
+                (HorizontalPaymentAllocationContext context) -> !context.isExitCondition()
-                    .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff).filter(e -> loanTransaction.isAfter(e.getDueDate()))
+                        && context.getCtx().getInstallments().stream().anyMatch(LoanRepaymentScheduleInstallment::isNotFullyPaidOff)
+                        && context.getTransactionAmountUnprocessed().isGreaterThanZero(), //
+                context -> {
+                    LoanRepaymentScheduleInstallment oldestPastDueInstallment = context.getCtx().getInstallments().stream()
+                            .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff)
+                            .filter(e -> context.getLoanTransaction().isAfter(e.getDueDate()))
                             .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null);
-            LoanRepaymentScheduleInstallment dueInstallment = installments.stream()
+                    LoanRepaymentScheduleInstallment dueInstallment = context.getCtx().getInstallments().stream()
-                    .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff).filter(e -> loanTransaction.isOn(e.getDueDate()))
+                            .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff)
+                            .filter(e -> context.getLoanTransaction().isOn(e.getDueDate()))
                             .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null);
 
                     // For having similar logic we are populating installment list even when the future installment
                     // allocation rule is NEXT_INSTALLMENT or LAST_INSTALLMENT hence the list has only one element.
                     List<LoanRepaymentScheduleInstallment> inAdvanceInstallments = new ArrayList<>();
-            if (FutureInstallmentAllocationRule.REAMORTIZATION.equals(futureInstallmentAllocationRule)) {
+                    if (FutureInstallmentAllocationRule.REAMORTIZATION.equals(context.getFutureInstallmentAllocationRule())) {
-                inAdvanceInstallments = installments.stream().filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff) //
+                        inAdvanceInstallments = context.getCtx().getInstallments().stream()
-                        .filter(e -> loanTransaction.isBefore(e.getDueDate())) //
+                                .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff) //
+                                .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate())) //
                                 .toList(); //
-            } else if (FutureInstallmentAllocationRule.NEXT_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
+                    } else if (FutureInstallmentAllocationRule.NEXT_INSTALLMENT.equals(context.getFutureInstallmentAllocationRule())) {
-                inAdvanceInstallments = installments.stream().filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff) //
+                        inAdvanceInstallments = context.getCtx().getInstallments().stream()
-                        .filter(e -> loanTransaction.isBefore(e.getDueDate())) //
+                                .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff) //
+                                .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate())) //
                                 .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream() //
                                 .toList(); //
-            } else if (FutureInstallmentAllocationRule.LAST_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
+                    } else if (FutureInstallmentAllocationRule.LAST_INSTALLMENT.equals(context.getFutureInstallmentAllocationRule())) {
-                inAdvanceInstallments = installments.stream().filter(inAdvanceInstallmentsFilteringRules)
+                        inAdvanceInstallments = context.getCtx().getInstallments().stream()
+                                .filter(context.getInAdvanceInstallmentsFilteringRules())
                                 .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream() //
                                 .toList(); //
-            } else if (FutureInstallmentAllocationRule.NEXT_LAST_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
+                    } else if (FutureInstallmentAllocationRule.NEXT_LAST_INSTALLMENT.equals(context.getFutureInstallmentAllocationRule())) {
                         // try to resolve as current installment ( not due )
-                inAdvanceInstallments = installments.stream().filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff) //
+                        inAdvanceInstallments = context.getCtx().getInstallments().stream()
-                        .filter(e -> loanTransaction.isBefore(e.getDueDate())) //
+                                .filter(LoanRepaymentScheduleInstallment::isNotFullyPaidOff) //
-                        .filter(f -> loanTransaction.isAfter(f.getFromDate())
+                                .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate())) //
-                                || (loanTransaction.isOn(f.getFromDate()) && f.getInstallmentNumber() == 1)) //
+                                .filter(f -> context.getLoanTransaction().isAfter(f.getFromDate())
+                                        || (context.getLoanTransaction().isOn(f.getFromDate()) && f.getInstallmentNumber() == 1)) //
                                 .toList(); //
                         // if there is no current installment, resolve similar to LAST_INSTALLMENT
                         if (inAdvanceInstallments.isEmpty()) {
-                    inAdvanceInstallments = installments.stream().filter(inAdvanceInstallmentsFilteringRules)
+                            inAdvanceInstallments = context.getCtx().getInstallments().stream()
+                                    .filter(context.getInAdvanceInstallmentsFilteringRules())
                                     .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream() //
                                     .toList(); //
                         }
                     }
 
-            int firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper.fetchFirstNormalInstallmentNumber(installments);
+                    int firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper
+                            .fetchFirstNormalInstallmentNumber(context.getCtx().getInstallments());
 
-            for (PaymentAllocationType paymentAllocationType : paymentAllocationTypes) {
+                    for (PaymentAllocationType paymentAllocationType : context.getPaymentAllocationTypes()) {
                         switch (paymentAllocationType.getDueType()) {
                             case PAST_DUE -> {
                                 if (oldestPastDueInstallment != null) {
-                            Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(charges, oldestPastDueInstallment,
+                                    Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(
-                                    firstNormalInstallmentNumber);
+                                            context.getCtx().getCharges(), oldestPastDueInstallment, firstNormalInstallmentNumber);
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, oldestPastDueInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), oldestPastDueInstallment,
-                            Loan loan = loanTransaction.getLoan();
+                                            context.getCtx().getCurrency());
-                            if (transactionCtx instanceof ProgressiveTransactionCtx ctx
+                                    Loan loan = context.getLoanTransaction().getLoan();
-                                    && loan.isInterestBearingAndInterestRecalculationEnabled() && !ctx.isChargedOff()) {
+                                    if (context.getCtx() instanceof ProgressiveTransactionCtx progressiveTransactionCtx
-                                paidPortion = handlingPaymentAllocationForInterestBearingProgressiveLoan(loanTransaction,
+                                            && loan.isInterestBearingAndInterestRecalculationEnabled()
-                                        transactionAmountUnprocessed, balances, paymentAllocationType, oldestPastDueInstallment, ctx,
+                                            && !progressiveTransactionCtx.isChargedOff()) {
-                                        loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges);
+                                        context.setAllocatedAmount(
+                                                handlingPaymentAllocationForInterestBearingProgressiveLoan(context.getLoanTransaction(),
+                                                        context.getTransactionAmountUnprocessed(), context.getBalances(),
+                                                        paymentAllocationType, oldestPastDueInstallment, progressiveTransactionCtx,
+                                                        loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges));
                                     } else {
-                                paidPortion = processPaymentAllocation(paymentAllocationType, oldestPastDueInstallment, loanTransaction,
+                                        context.setAllocatedAmount(processPaymentAllocation(paymentAllocationType, oldestPastDueInstallment,
-                                        transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping,
+                                                context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
-                                        oldestPastDueInstallmentCharges, balances, LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                                loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges,
+                                                context.getBalances(), LoanRepaymentScheduleInstallment.PaymentAction.PAY));
                                     }
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(paidPortion);
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                 } else {
-                            exit = true;
+                                    context.setExitCondition(true);
                                 }
                             }
                             case DUE -> {
                                 if (dueInstallment != null) {
-                            Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(charges, dueInstallment,
+                                    Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(context.getCtx().getCharges(),
-                                    firstNormalInstallmentNumber);
+                                            dueInstallment, firstNormalInstallmentNumber);
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, dueInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), dueInstallment,
-                            Loan loan = loanTransaction.getLoan();
+                                            context.getCtx().getCurrency());
-                            if (transactionCtx instanceof ProgressiveTransactionCtx ctx
+                                    Loan loan = context.getLoanTransaction().getLoan();
-                                    && loan.isInterestBearingAndInterestRecalculationEnabled() && !ctx.isChargedOff()) {
+                                    if (context.getCtx() instanceof ProgressiveTransactionCtx progressiveTransactionCtx
-                                paidPortion = handlingPaymentAllocationForInterestBearingProgressiveLoan(loanTransaction,
+                                            && loan.isInterestBearingAndInterestRecalculationEnabled()
-                                        transactionAmountUnprocessed, balances, paymentAllocationType, dueInstallment, ctx,
+                                            && !progressiveTransactionCtx.isChargedOff()) {
-                                        loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges);
+                                        context.setAllocatedAmount(handlingPaymentAllocationForInterestBearingProgressiveLoan(
+                                                context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
+                                                context.getBalances(), paymentAllocationType, dueInstallment, progressiveTransactionCtx,
+                                                loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges));
                                     } else {
-                                paidPortion = processPaymentAllocation(paymentAllocationType, dueInstallment, loanTransaction,
+                                        context.setAllocatedAmount(processPaymentAllocation(paymentAllocationType, dueInstallment,
-                                        transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges,
+                                                context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
-                                        balances, LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                                loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges, context.getBalances(),
+                                                LoanRepaymentScheduleInstallment.PaymentAction.PAY));
                                     }
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(paidPortion);
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                 } else {
-                            exit = true;
+                                    context.setExitCondition(true);
                                 }
                             }
                             case IN_ADVANCE -> {
                                 int numberOfInstallments = inAdvanceInstallments.size();
                                 if (numberOfInstallments > 0) {
-                            // This will be the same amount as transactionAmountUnprocessed in case of the future
+                                    // This will be the same amount as transactionAmountUnprocessed in case of the
+                                    // future
                                     // installment allocation is NEXT_INSTALLMENT or LAST_INSTALLMENT
-                            Money evenPortion = transactionAmountUnprocessed.dividedBy(numberOfInstallments, MoneyHelper.getMathContext());
+                                    Money evenPortion = context.getTransactionAmountUnprocessed().dividedBy(numberOfInstallments,
+                                            MoneyHelper.getMathContext());
                                     // Adjustment might be needed due to the divide operation and the rounding mode
-                            Money balanceAdjustment = transactionAmountUnprocessed.minus(evenPortion.multipliedBy(numberOfInstallments));
+                                    Money balanceAdjustment = context.getTransactionAmountUnprocessed()
+                                            .minus(evenPortion.multipliedBy(numberOfInstallments));
                                     if (evenPortion.add(balanceAdjustment).isLessThanZero()) {
-                                // Note: Rounding mode DOWN grants that evenPortion cant pay more than unprocessed
+                                        // Note: Rounding mode DOWN grants that evenPortion cant pay more than
+                                        // unprocessed
                                         // transaction amount.
-                                evenPortion = transactionAmountUnprocessed.dividedBy(numberOfInstallments,
+                                        evenPortion = context.getTransactionAmountUnprocessed().dividedBy(numberOfInstallments,
                                                 new MathContext(MoneyHelper.getMathContext().getPrecision(), RoundingMode.DOWN));
-                                balanceAdjustment = transactionAmountUnprocessed.minus(evenPortion.multipliedBy(numberOfInstallments));
+                                        balanceAdjustment = context.getTransactionAmountUnprocessed()
+                                                .minus(evenPortion.multipliedBy(numberOfInstallments));
                                     }
 
                                     for (LoanRepaymentScheduleInstallment inAdvanceInstallment : inAdvanceInstallments) {
-                                Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(charges, inAdvanceInstallment,
+                                        Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(
-                                        firstNormalInstallmentNumber);
+                                                context.getCtx().getCharges(), inAdvanceInstallment, firstNormalInstallmentNumber);
 
                                         LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                        transactionMappings, loanTransaction, inAdvanceInstallment, currency);
+                                                context.getTransactionMappings(), context.getLoanTransaction(), inAdvanceInstallment,
+                                                context.getCtx().getCurrency());
 
-                                Loan loan = loanTransaction.getLoan();
+                                        Loan loan = context.getLoanTransaction().getLoan();
                                         // Adjust the portion for the last installment
                                         if (inAdvanceInstallment.equals(inAdvanceInstallments.get(numberOfInstallments - 1))) {
                                             evenPortion = evenPortion.add(balanceAdjustment);
                                         }
-                                if (transactionCtx instanceof ProgressiveTransactionCtx ctx
+                                        if (context.getCtx() instanceof ProgressiveTransactionCtx progressiveTransactionCtx
-                                        && loan.isInterestBearingAndInterestRecalculationEnabled() && !ctx.isChargedOff()) {
+                                                && loan.isInterestBearingAndInterestRecalculationEnabled()
-                                    paidPortion = handlingPaymentAllocationForInterestBearingProgressiveLoan(loanTransaction, evenPortion,
+                                                && !progressiveTransactionCtx.isChargedOff()) {
-                                            balances, paymentAllocationType, inAdvanceInstallment, ctx,
+                                            context.setAllocatedAmount(handlingPaymentAllocationForInterestBearingProgressiveLoan(
-                                            loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges);
+                                                    context.getLoanTransaction(), evenPortion, context.getBalances(), paymentAllocationType,
+                                                    inAdvanceInstallment, progressiveTransactionCtx,
+                                                    loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges));
                                         } else {
-                                    paidPortion = processPaymentAllocation(paymentAllocationType, inAdvanceInstallment, loanTransaction,
+                                            context.setAllocatedAmount(processPaymentAllocation(paymentAllocationType, inAdvanceInstallment,
-                                            evenPortion, loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges, balances,
+                                                    context.getLoanTransaction(), evenPortion, loanTransactionToRepaymentScheduleMapping,
-                                            LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                                    inAdvanceInstallmentCharges, context.getBalances(),
+                                                    LoanRepaymentScheduleInstallment.PaymentAction.PAY));
                                         }
-                                transactionAmountUnprocessed = transactionAmountUnprocessed.minus(paidPortion);
+                                        context.setTransactionAmountUnprocessed(
+                                                context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                     }
                                 } else {
-                            exit = true;
+                                    context.setExitCondition(true);
                                 }
                             }
                         }
                     }
-        }
+                });
-        // We are allocating till there is no pending installment or there is no more unprocessed transaction amount
+        return paymentAllocationContext.getTransactionAmountUnprocessed();
-        // or there is no more outstanding balance of the allocation type
-        while (!exit && installments.stream().anyMatch(LoanRepaymentScheduleInstallment::isNotFullyPaidOff)
-                && transactionAmountUnprocessed.isGreaterThanZero());
-        return transactionAmountUnprocessed;
     }
 
     private Money handlingPaymentAllocationForInterestBearingProgressiveLoan(LoanTransaction loanTransaction,
@@ -2115,115 +2172,146 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
 
     private Money processPeriodsVertically(LoanTransaction loanTransaction, TransactionCtx ctx, Money transactionAmountUnprocessed,
             LoanPaymentAllocationRule paymentAllocationRule, List<LoanTransactionToRepaymentScheduleMapping> transactionMappings,
-            Set<LoanCharge> charges, Balances balances) {
+            Balances balances) {
-        MonetaryCurrency currency = ctx.getCurrency();
+        VerticalPaymentAllocationContext paymentAllocationContext = new VerticalPaymentAllocationContext(ctx, loanTransaction,
-        List<LoanRepaymentScheduleInstallment> installments = ctx.getInstallments();
+                paymentAllocationRule.getFutureInstallmentAllocationRule(), transactionMappings, balances);
-        int firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper.fetchFirstNormalInstallmentNumber(installments);
+        paymentAllocationContext.setTransactionAmountUnprocessed(transactionAmountUnprocessed);
         for (PaymentAllocationType paymentAllocationType : paymentAllocationRule.getAllocationTypes()) {
-            FutureInstallmentAllocationRule futureInstallmentAllocationRule = paymentAllocationRule.getFutureInstallmentAllocationRule();
+            paymentAllocationContext.setAllocatedAmount(Money.zero(ctx.getCurrency()));
-            LoanRepaymentScheduleInstallment currentInstallment = null;
+            paymentAllocationContext.setInstallment(null);
-            Money paidPortion = Money.zero(currency);
+            paymentAllocationContext.setPaymentAllocationType(paymentAllocationType);
-            do {
+            LoopGuard.runSafeDoWhileLoop(paymentAllocationContext.getCtx().getInstallments().size() * 100, //
-                Predicate<LoanRepaymentScheduleInstallment> predicate = getFilterPredicate(paymentAllocationType, currency);
+                    paymentAllocationContext, //
-                switch (paymentAllocationType.getDueType()) {
+                    (VerticalPaymentAllocationContext context) -> context.getInstallment() != null
+                            && context.getTransactionAmountUnprocessed().isGreaterThanZero()
+                            && context.getAllocatedAmount().isGreaterThanZero(), //
+                    context -> {
+                        Predicate<LoanRepaymentScheduleInstallment> predicate = getFilterPredicate(context.getPaymentAllocationType(),
+                                context.getCtx().getCurrency());
+                        switch (context.getPaymentAllocationType().getDueType()) {
                             case PAST_DUE -> {
-                        currentInstallment = installments.stream().filter(predicate).filter(e -> loanTransaction.isAfter(e.getDueDate()))
+                                context.setInstallment(context.getCtx().getInstallments().stream().filter(predicate)
-                                .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null);
+                                        .filter(e -> context.getLoanTransaction().isAfter(e.getDueDate()))
-                        if (currentInstallment != null) {
+                                        .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null));
-                            Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(charges, currentInstallment,
+                                if (context.getInstallment() != null) {
-                                    firstNormalInstallmentNumber);
+                                    Set<LoanCharge> oldestPastDueInstallmentCharges = getLoanChargesOfInstallment(
+                                            context.getCtx().getCharges(), context.getInstallment(),
+                                            context.getFirstNormalInstallmentNumber());
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, currentInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), context.getInstallment(),
-                            paidPortion = processPaymentAllocation(paymentAllocationType, currentInstallment, loanTransaction,
+                                            context.getCtx().getCurrency());
-                                    transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping,
+                                    context.setAllocatedAmount(
-                                    oldestPastDueInstallmentCharges, balances, LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                            processPaymentAllocation(context.getPaymentAllocationType(), context.getInstallment(),
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(paidPortion);
+                                                    context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
+                                                    loanTransactionToRepaymentScheduleMapping, oldestPastDueInstallmentCharges,
+                                                    context.getBalances(), LoanRepaymentScheduleInstallment.PaymentAction.PAY));
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                 }
                             }
                             case DUE -> {
-                        currentInstallment = installments.stream().filter(predicate).filter(e -> loanTransaction.isOn(e.getDueDate()))
+                                context.setInstallment(context.getCtx().getInstallments().stream().filter(predicate)
-                                .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null);
+                                        .filter(e -> context.getLoanTransaction().isOn(e.getDueDate()))
-                        if (currentInstallment != null) {
+                                        .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).orElse(null));
-                            Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(charges, currentInstallment,
+                                if (context.getInstallment() != null) {
-                                    firstNormalInstallmentNumber);
+                                    Set<LoanCharge> dueInstallmentCharges = getLoanChargesOfInstallment(context.getCtx().getCharges(),
+                                            context.getInstallment(), context.getFirstNormalInstallmentNumber());
                                     LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                    transactionMappings, loanTransaction, currentInstallment, currency);
+                                            context.getTransactionMappings(), context.getLoanTransaction(), context.getInstallment(),
-                            paidPortion = processPaymentAllocation(paymentAllocationType, currentInstallment, loanTransaction,
+                                            context.getCtx().getCurrency());
-                                    transactionAmountUnprocessed, loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges,
+                                    context.setAllocatedAmount(
-                                    balances, LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                            processPaymentAllocation(context.getPaymentAllocationType(), context.getInstallment(),
-                            transactionAmountUnprocessed = transactionAmountUnprocessed.minus(paidPortion);
+                                                    context.getLoanTransaction(), context.getTransactionAmountUnprocessed(),
+                                                    loanTransactionToRepaymentScheduleMapping, dueInstallmentCharges, context.getBalances(),
+                                                    LoanRepaymentScheduleInstallment.PaymentAction.PAY));
+                                    context.setTransactionAmountUnprocessed(
+                                            context.getTransactionAmountUnprocessed().minus(context.getAllocatedAmount()));
                                 }
                             }
                             case IN_ADVANCE -> {
-                        // For having similar logic we are populating installment list even when the future installment
+                                // For having similar logic we are populating installment list even when the future
-                        // allocation rule is NEXT_INSTALLMENT or LAST_INSTALLMENT hence the list has only one element.
+                                // installment
+                                // allocation rule is NEXT_INSTALLMENT or LAST_INSTALLMENT hence the list has only one
+                                // element.
                                 List<LoanRepaymentScheduleInstallment> currentInstallments = new ArrayList<>();
-                        if (FutureInstallmentAllocationRule.REAMORTIZATION.equals(futureInstallmentAllocationRule)) {
+                                if (FutureInstallmentAllocationRule.REAMORTIZATION.equals(context.getFutureInstallmentAllocationRule())) {
-                            currentInstallments = installments.stream().filter(predicate)
+                                    currentInstallments = context.getCtx().getInstallments().stream().filter(predicate)
-                                    .filter(e -> loanTransaction.isBefore(e.getDueDate())).toList();
+                                            .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate())).toList();
-                        } else if (FutureInstallmentAllocationRule.NEXT_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
+                                } else if (FutureInstallmentAllocationRule.NEXT_INSTALLMENT
-                            currentInstallments = installments.stream().filter(predicate)
+                                        .equals(context.getFutureInstallmentAllocationRule())) {
-                                    .filter(e -> loanTransaction.isBefore(e.getDueDate()))
+                                    currentInstallments = context.getCtx().getInstallments().stream().filter(predicate)
-                                    .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream().toList();
+                                            .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate()))
-                        } else if (FutureInstallmentAllocationRule.LAST_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
+                                            .min(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream()
-                            currentInstallments = installments.stream().filter(predicate)
+                                            .toList();
-                                    .filter(e -> loanTransaction.isBefore(e.getDueDate()))
+                                } else if (FutureInstallmentAllocationRule.LAST_INSTALLMENT
-                                    .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream().toList();
+                                        .equals(context.getFutureInstallmentAllocationRule())) {
-                        } else if (FutureInstallmentAllocationRule.NEXT_LAST_INSTALLMENT.equals(futureInstallmentAllocationRule)) {
+                                    currentInstallments = context.getCtx().getInstallments().stream().filter(predicate)
-                            // get current installment where from date < transaction date < to date OR transaction date
+                                            .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate()))
+                                            .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream()
+                                            .toList();
+                                } else if (FutureInstallmentAllocationRule.NEXT_LAST_INSTALLMENT
+                                        .equals(context.getFutureInstallmentAllocationRule())) {
+                                    // get current installment where from date < transaction date < to date OR
+                                    // transaction date
                                     // is on first installment's first day ( from day )
-                            currentInstallments = installments.stream().filter(predicate)
+                                    currentInstallments = context.getCtx().getInstallments().stream().filter(predicate)
-                                    .filter(e -> loanTransaction.isBefore(e.getDueDate()))
+                                            .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate()))
-                                    .filter(f -> loanTransaction.isAfter(f.getFromDate())
+                                            .filter(f -> context.getLoanTransaction().isAfter(f.getFromDate())
-                                            || (loanTransaction.isOn(f.getFromDate()) && f.getInstallmentNumber() == 1))
+                                                    || (context.getLoanTransaction().isOn(f.getFromDate())
+                                                            && f.getInstallmentNumber() == 1))
                                             .toList();
                                     // if there is no current in advance installment resolve similar to LAST_INSTALLMENT
                                     if (currentInstallments.isEmpty()) {
-                                currentInstallments = installments.stream().filter(predicate)
+                                        currentInstallments = context.getCtx().getInstallments().stream().filter(predicate)
-                                        .filter(e -> loanTransaction.isBefore(e.getDueDate()))
+                                                .filter(e -> context.getLoanTransaction().isBefore(e.getDueDate()))
                                                 .max(Comparator.comparing(LoanRepaymentScheduleInstallment::getInstallmentNumber)).stream()
                                                 .toList();
                                     }
                                 }
                                 int numberOfInstallments = currentInstallments.size();
-                        paidPortion = Money.zero(currency);
+                                context.setAllocatedAmount(Money.zero(context.getCtx().getCurrency()));
                                 if (numberOfInstallments > 0) {
-                            // This will be the same amount as transactionAmountUnprocessed in case of the future
+                                    // This will be the same amount as transactionAmountUnprocessed in case of the
+                                    // future
                                     // installment allocation is NEXT_INSTALLMENT or LAST_INSTALLMENT
-                            Money evenPortion = transactionAmountUnprocessed.dividedBy(numberOfInstallments, MoneyHelper.getMathContext());
+                                    Money evenPortion = context.getTransactionAmountUnprocessed().dividedBy(numberOfInstallments,
+                                            MoneyHelper.getMathContext());
                                     // Adjustment might be needed due to the divide operation and the rounding mode
-                            Money balanceAdjustment = transactionAmountUnprocessed.minus(evenPortion.multipliedBy(numberOfInstallments));
+                                    Money balanceAdjustment = context.getTransactionAmountUnprocessed()
+                                            .minus(evenPortion.multipliedBy(numberOfInstallments));
                                     for (LoanRepaymentScheduleInstallment internalCurrentInstallment : currentInstallments) {
-                                currentInstallment = internalCurrentInstallment;
+                                        context.setInstallment(internalCurrentInstallment);
-                                Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(charges, currentInstallment,
+                                        Set<LoanCharge> inAdvanceInstallmentCharges = getLoanChargesOfInstallment(
-                                        firstNormalInstallmentNumber);
+                                                context.getCtx().getCharges(), context.getInstallment(),
+                                                context.getFirstNormalInstallmentNumber());
                                         // Adjust the portion for the last installment
                                         if (internalCurrentInstallment.equals(currentInstallments.get(numberOfInstallments - 1))) {
                                             evenPortion = evenPortion.add(balanceAdjustment);
                                         }
                                         LoanTransactionToRepaymentScheduleMapping loanTransactionToRepaymentScheduleMapping = getTransactionMapping(
-                                        transactionMappings, loanTransaction, currentInstallment, currency);
+                                                context.getTransactionMappings(), context.getLoanTransaction(), context.getInstallment(),
-                                Money internalPaidPortion = processPaymentAllocation(paymentAllocationType, currentInstallment,
+                                                context.getCtx().getCurrency());
-                                        loanTransaction, evenPortion, loanTransactionToRepaymentScheduleMapping,
+                                        Money internalPaidPortion = processPaymentAllocation(context.getPaymentAllocationType(),
-                                        inAdvanceInstallmentCharges, balances, LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                                context.getInstallment(), context.getLoanTransaction(), evenPortion,
-                                // Some extra logic to allocate as much as possible across the installments if the
+                                                loanTransactionToRepaymentScheduleMapping, inAdvanceInstallmentCharges,
+                                                context.getBalances(), LoanRepaymentScheduleInstallment.PaymentAction.PAY);
+                                        // Some extra logic to allocate as much as possible across the installments if
+                                        // the
                                         // outstanding balances are different
                                         if (internalPaidPortion.isGreaterThanZero()) {
-                                    paidPortion = internalPaidPortion;
+                                            context.setAllocatedAmount(internalPaidPortion);
                                         }
-                                transactionAmountUnprocessed = transactionAmountUnprocessed.minus(internalPaidPortion);
+                                        context.setTransactionAmountUnprocessed(
+                                                context.getTransactionAmountUnprocessed().minus(internalPaidPortion));
                                     }
                                 } else {
-                            currentInstallment = null;
+                                    context.setInstallment(null);
                                 }
                             }
                         }
+                    });
         }
-            // We are allocating till there is no pending installment or there is no more unprocessed transaction amount
+        return paymentAllocationContext.getTransactionAmountUnprocessed();
-            // or there is no more outstanding balance of the allocation type
-            while (currentInstallment != null && transactionAmountUnprocessed.isGreaterThanZero() && paidPortion.isGreaterThanZero());
-        }
-        return transactionAmountUnprocessed;
     }
 
     private Predicate<LoanRepaymentScheduleInstallment> getFilterPredicate(PaymentAllocationType paymentAllocationType,
@@ -2454,4 +2542,63 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
         ctx.getChangedTransactionDetail().addNewTransactionChangeBeforeExistingOne(new TransactionChangeData(null, newAccrualTransaction),
                 chargeOffTransaction);
     }
+
+    @Getter
+    @Setter
+    private static class VerticalPaymentAllocationContext implements LoopContext {
+
+        private final TransactionCtx ctx;
+        private final LoanTransaction loanTransaction;
+        private final FutureInstallmentAllocationRule futureInstallmentAllocationRule;
+        private final List<LoanTransactionToRepaymentScheduleMapping> transactionMappings;
+        private final Balances balances;
+        private final int firstNormalInstallmentNumber;
+        private LoanRepaymentScheduleInstallment installment;
+        private Money transactionAmountUnprocessed;
+        private Money allocatedAmount;
+        private PaymentAllocationType paymentAllocationType;
+
+        VerticalPaymentAllocationContext(TransactionCtx ctx, LoanTransaction loanTransaction,
+                FutureInstallmentAllocationRule futureInstallmentAllocationRule,
+                List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances) {
+            this.ctx = ctx;
+            this.loanTransaction = loanTransaction;
+            this.futureInstallmentAllocationRule = futureInstallmentAllocationRule;
+            this.transactionMappings = transactionMappings;
+            this.balances = balances;
+            firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper
+                    .fetchFirstNormalInstallmentNumber(getCtx().getInstallments());
+        }
+    }
+
+    @Getter
+    @Setter
+    private static class HorizontalPaymentAllocationContext implements LoopContext {
+
+        private final TransactionCtx ctx;
+        private final LoanTransaction loanTransaction;
+        private final List<PaymentAllocationType> paymentAllocationTypes;
+        private final FutureInstallmentAllocationRule futureInstallmentAllocationRule;
+        private final List<LoanTransactionToRepaymentScheduleMapping> transactionMappings;
+        private final Balances balances;
+        private final int firstNormalInstallmentNumber;
+        private LoanRepaymentScheduleInstallment installment;
+        private Money transactionAmountUnprocessed;
+        private Money allocatedAmount;
+        private boolean exitCondition;
+        private Predicate<LoanRepaymentScheduleInstallment> inAdvanceInstallmentsFilteringRules;
+
+        HorizontalPaymentAllocationContext(TransactionCtx ctx, LoanTransaction loanTransaction,
+                List<PaymentAllocationType> paymentAllocationTypes, FutureInstallmentAllocationRule futureInstallmentAllocationRule,
+                List<LoanTransactionToRepaymentScheduleMapping> transactionMappings, Balances balances) {
+            this.ctx = ctx;
+            this.loanTransaction = loanTransaction;
+            this.paymentAllocationTypes = paymentAllocationTypes;
+            this.futureInstallmentAllocationRule = futureInstallmentAllocationRule;
+            this.transactionMappings = transactionMappings;
+            this.balances = balances;
+            firstNormalInstallmentNumber = LoanRepaymentScheduleProcessingWrapper
+                    .fetchFirstNormalInstallmentNumber(getCtx().getInstallments());
+        }
+    }
 }