Looking for Loan Management Software (LMS)? Here are three things to focus on when choosing one for your business:
1. How much are you willing to pay?
2. Why Does Your Business Need a Loan Management Software?
3. What features does your business require in a Loan Management software?
To help you answer these questions, here is our guide on how to choose the right loan management software for your business.
What is Loan Management Software?
As the name suggests, Loan Management Software was originally designed to help lenders build and maintain relationships with new and existing customers who have borrowed cash. Today, however, Loan Management Software has evolved from a simple contact management system to a robust tool that allows you to manage leads, customers, sales, marketing, call centers, scores, signatures, payment processing, reconciliation, accounting, backend processing and others. types of transaction and operational data, all in one easily accessible solution.
It can also integrate data from other areas of your business without further work. A Loan Management software provides lenders and their sales team with all the tools needed to grow your business in a central hub with the least amount of work.
How Much Does a Loan Management Software Cost?
The cost of LMS varies greatly. LMS providers typically use a transaction-based pricing model that may depend on a number of factors, such as the number of active loans and the payment processed.
For the most part, you can expect to pay per Transaction, per month or one-time cost depending on the model. You may also come across providers that charge a flat monthly fee but require larger packages or additional support and maintenance fees. Pricing can range from $ 1 per Transaction per Month to hundreds of dollars per Month, depending on the unique needs of your business.
Don’t have a budget for LMS software? Or maybe you’re not sure LMS software is right for your business, but want to see what it has to offer? One option is to schedule a demo of a few LMS solutions in the market or try a free trial if offered by any of the vendors.
Need Loan Management Software?
LMS can make your life as a lender a lot easier and at the same time help your agents and managers get the job done in a more efficient and streamlined way.
If the following statements apply to you, your company needs Loan Management Software:
1. You need robust contact management.
At its core, the contact management portion of the LMS is about keeping information from various sources organized. If you are looking for a better way to store and manage customer information, LMS is the best solution for your business. It serves as a complete database for all types of customer insights, including contact information, loan applications, loans and transaction history, how customers browse your site, ways and times, applied a loan from your company, demographics, interests, personal preferences and more. You can then use this information to segment customers for marketing purposes or to easily search for customers that fit specific criteria.
2. You are looking for an automated way to increase sales.
Not only does LMS keep your contacts organized – it also offers a wealth of tools to help you increase sales and execute more effective marketing campaigns. These include:
Lead Generation. Find new customers by automatically entering leads from various sources such as social media, website visitors, lead providers, incoming calls, newsletter signups and more.
E-mail marketing. Automatically build email lists, start email marketing campaigns, and measure performance. Loan Management Software can also send email reminders to customers and prospects to drive sales – for example, by reminding them of abandoned loan applications, suggesting loan products or promotions they may be interested in and other ways to offset lost sales opportunities.
3. You are looking for an automated way to funnel your leads
A robust LMS does not allow you to work with prospects, thus wasting your precious time. It integrates a configurable signing engine that makes the first level of filtering your quality managers.
Under-writing. Automatically qualify and filter leads with predefined set of rules or criteria (Signing), so you only need quality managers when sent to credit bureaus for scores.
Score. From a lender’s perspective, it is not enough to qualify leads to accept the leads because each lead is associated with a specific cost. Leads must be scored for different criteria before being accepted. There are various credit bureaus on the market that allow scores to be scored, and sometimes managers should go through multiple agencies’ verifications before accepting them. A good LMS should allow such integrations of multiple credit bureaus to score leads and sometimes with an opportunity to define the order in which to pass through each credit bureau
Verification. Now we have the quality managers that need to be verified. Only at this point will your agents start calling the wires and going through various verification steps in the loan application. Flexible Loan Management software allows you to define the confirmation process, call queue, agent allocation for different types of leads, auto origin loans for good prospects, etc. Any lead that passes this verification is ready for approval upon the customer’s signing of the electronic loan agreement.
4. You are looking to streamline the loan approval process
Loan agreement. The electronic loan agreement ties the customers with the lender. Any lender can choose to have multiple loan agreements for different loan types or products and the option to add or shorten rules based on the lending rules of each state.
E-characters. Any prospect who passes this verification is ready for approval when the customer signs the electronic loan agreement called E-sign. A good loan management software either has a built-in E-Sign mechanism or allows it to integrate with E-Sign Services such as DocuSign or HelloSign. The built-in mechanism obviously reduces costs, while the integration allows you to use the service of your choice for e-signature.
Loan Approval. The moment the customer signs the e-sign document, the loan application is sent to the agent manager for approval. In the case of good prospects, if an automatic origin process is defined in Loan Management Software, the loan application is automatically approved and ready to be funded. Other loan applications are approved by the agent’s manager and upon approval and apply for financing.
5. You want to automate payment processing
Payment processing. Once the loan is approved, it is ready for financing. Funding can be done immediately or at the end of each day. An effective Loan Management software must be able to define when and how the financing should be done each. Usually payments are processed through ACH providers. The Loan Management software can integrate one or more ACH providers based on lender specifications.
Returns Processing. Receiving returns from the bank or payment processors can be a tedious task and update them in LMS. The returned transaction must be charged a NSF fee or a late fee to be notified to the customer. The LMS you select should have the ability to automatically process this information.
Collection. Collections are part of any lending portfolio. Loans that do not meet the conditions can be transferred to collection agencies by the lenders. This follows a set of rules that vary based on the state and the lender. The LMS you choose must have the means to meet the rules and must be flexible enough to change at any given time.
Choosing the right loan management software
Ready to invest in Loan Management software? There are many different types available, so choosing the right one is key to making it work for your lending business. Here’s what a lender needs to ask a potential LMS provider
1. Is it built for your market and your loan types?
2. How easy is it to use? Can I easily train employees?
3. Where is the software adapted?
4. What features are available to help me with sales, marketing and other aspects of my business?
5. How easy is it to integrate with third-party providers I already use?
6. What are the limitations of using the software?
7. What engagement models and cost options are available? Are there setup or additional fees? What if I need to expand my portfolio?
8. What type of security features does it have to protect my company’s and customers’ data? What happens if there is an interruption? How do I back up my data in the cloud and access it right away?
9. What customer service do you offer if I need help? Can I at any time for you, or is there a long turnaround?