Loan Servicing Software

Your Comprehensive Guide to Loan Servicing Software Solutions

Date published: 06 Nov 2017

Are you looking for a loan management software? When choosing one for your business, keep the following three factors in mind:

  • How much are you willing to pay?
  • Why does your business need Loan Servicing Software?
  • Which features in a loan management software are essential for your company?

Here is our guide on selecting the best loan management software for your company.

What is Loan Management Software?

The purpose of loan management software is to assist lenders in establishing and preserving connections with both new and current money borrowers. But loan management software has developed over time, starting as a primary contact management system and becoming a powerful tool for managing leads, clients, sales, marketing, call centers, underwriting, scoring, payment processing, accounting, reconciliation, and backend processing.

Although many solutions can do this for lenders, the beauty of SparkLMS is that it can accomplish these tasks automatically using just one solution. It can also integrate data from other business areas without any additional work.

How much does a Loan Servicing Software cost?

Typically, lending software providers employ a transaction-based pricing model, with prices varying according to the volume of payments received and the number of active loans.

Generally, depending on the arrangement, you can anticipate paying on a per-transaction, per-month, or one-time basis. Depending on your organization's requirements, pricing can vary from $1 per transaction to hundreds of thousands per month. Plan a demo of a few LMS solutions available in the market, or, if provided by any of the suppliers, take advantage of a free trial.

Do you need Loan Servicing Software?

Loan management software is necessary for your company if any of the following statements describes your business:

1. You need robust Contact management

It serves as a comprehensive database for consumer insights, including contact details, loan and transaction histories, website browsing patterns, how and when customers have applied for loans from your organization, demographic data, inclinations, and more. Afterward, you can use this information to segment your consumer base for marketing purposes.

2. You're trying to find a strategy to increase sales automatically

In addition to managing your contacts, LMS provides many additional features that can improve the sales and efficacy of your marketing initiatives. The feature list includes:

Generate leads by automatically obtaining leads from social media, website traffic, lead suppliers, incoming calls, newsletter sign-ups, and more.

Email marketing: Create email lists automatically, send out campaigns, and track results. LMS can send email reminders to clients and potential clients to increase sales. These emails include suggestions for loan products or promotions that the recipients would find interesting, a reminder of abandoned loan applications, and other strategies to compensate for lost sales chances.

3. You're trying to find an automatic lead funneling system

An adjustable underwriting engine integrated into a robust LMS initially filters your quality leads.

Underwriting: Qualify and filter leads automatically with a predefined set of rules or criteria (Underwriting) so that you only have to spend on quality leads when sent to credit bureaus for scoring.

Scoring: From a lender's perspective, Every lead is associated with a specific cost. The leads need to be scored for various criteria before they are received. Various Credit Bureaus in the market allow the leads to be cut; Leads may occasionally need to go through many Bureaus' verification processes before approval. Such lead scoring interfaces with many credit bureaus should be possible with a competent LMS, and occasionally, it will even offer the ability to specify which leads should go through which credit bureau first.

Verification: We now have the quality leads that need to be verified. Your agents begin calling the leads and completing the loan application's different verification stages at this point. Using configurable loan management software, you may specify the call queue, agent assignment to different lead types, verification procedure, and auto-originate loans for quality leads. After the consumer signs the electronic loan agreement, any lead that completes this verification process is eligible for approval.

4. Your goal is to streamline the process of approving loans

Loan Agreement: Customers and lenders are bound by the terms of the electronic loan agreement. Any lender would have the option to create many loan agreements for various loan products or types and the flexibility to add or remove criteria by state lending regulations.

E-sign: After the consumer signs the Electronic Loan Agreement, or E-sign, any lead that passes this verification process is eligible for approval. E-sign features can be integrated with E-sign services like DocuSign or HelloSign, or the software can function independently.

Loan Approval: When a customer signs the E-Sign Document, the Loan Application is sent to the Agent's Manager for Approval. Suppose the Loan Management Software has an auto-origination process configured. In that case, the Loan Application will be automatically accepted in the event of a good lead and be prepared for funding.

5. You're looking to automate payment processing

Payment Processing: Loan Management Software should be able to specify when and how funding will occur when the loan is accepted. Then, the payments are processed through ACH Providers.

Return Processing: It can be time-consuming to receive returns from banks or payment processors and update them in the Loan Servicing Software. The returned transaction will be charged with an NSF Fee, which the Loan Servicing Software will automatically process.

Collection: Non-performing loans may be handed over to collection agencies by the lenders. The LMS you select should be able to adapt to new regulations and can do so at any moment.

Choosing the Right Loan Management Software

Here's what a lender needs to ask a potential LMS Provider:

  • Is it built for your loan types and market?
  • Is it easy to use?
  • Is the software customizable?
  • What special features are available to assist with sales and marketing of your business?
  • Is the LMS easy to integrate with other third-party providers that you use?
  • What are the limitations of using the software?
  • What engagement models and costing options are available? Are there any setup fees?
  • What security features does it have to protect my business and customer's data? What will happen in the event of a power outage? How does the cloud back up your data?
  • If you need help, what customer support options do you offer?

We hope that you found this article helpful. If you are interested in a demo of SparkLMS, write to us at [email protected]