diff --git a/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java b/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java
index 2902c0222..6d883595a 100644
--- a/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java
+++ b/fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java
@@ -3202,8 +3202,6 @@ public class Loan extends AbstractAuditableWithUTCDateTimeCustom {
 
         if (loanTransaction.isRecoveryRepayment()) {
             loanLifecycleStateMachine.transition(LoanEvent.LOAN_RECOVERY_PAYMENT, this);
-        } else {
-            loanLifecycleStateMachine.transition(LoanEvent.LOAN_REPAYMENT_OR_WAIVER, this);
         }
 
         if (loanTransaction.isRecoveryRepayment()
@@ -3433,6 +3431,8 @@ public class Loan extends AbstractAuditableWithUTCDateTimeCustom {
         } else if (this.summary.isRepaidInFull(loanCurrency())) {
             handleLoanRepaymentInFull(transactionDate, loanLifecycleStateMachine);
             statusChanged = true;
+        } else {
+            loanLifecycleStateMachine.transition(LoanEvent.LOAN_REPAYMENT_OR_WAIVER, this);
         }
         if (this.totalOverpaid == null || BigDecimal.ZERO.compareTo(this.totalOverpaid) == 0) {
             this.overpaidOnDate = null;