As a lender, you might want to grow your lending portfolio by offering different lending products, but you probably don't want to have multiple loan management systems (LMS). At LoanPro we offer four loan categories (referred to in our software as loan classes) and four loan types under each. Many different products can be configured under each loan type, making it easy to service a diverse loan product portfolio within one LMS.

Loan classes

Loan Classes are the categories we use to distinguish why a loan was given out. When setting up defaults or creating a new loan, you will select a loan class and loan type first. The options for each are outlined below. 

Automobile

Automotive loans are any loans secured by collateral with a Vehicle Identification Number (VIN). That typically refers to cars, but it also includes ATVs, mobile homes, boats, and other vehicles. These vehicles might be items that the lender sells and finances, or they might be the borrower's own property that they put up as collateral in order to get a loan.

Consumer

Consumer loans are typically unsecured loans given to individual borrowers. They include student loans, personal loans, point-of-sale loans, and more.

Real Estate

Real Estate Loans are centered around a piece of real estate. We should note that LoanPro is not built for traditional mortgage lending. Instead, most of the lenders who use real estate loans in LMS are issuing second mortgages, home improvement loans, construction loans, or home equity lines of credit (HELOC). The loan might be secured with the piece of real estate in question, or it might be unsecured (either way, you may want to use collateral to keep track of what that real estate is).

Other

This is a catchall loan class for any loans that don't match one of the three other classes. This includes many types of small-dollar lender, like payday lenders, tribal lenders, and lenders who work with a credit services organization (CSO).

Loan types

Loan Types are the categories we use to distinguish how the loan is calculated. 

Credit limit

A credit limit loan has a set maximum amount of money that can be borrowed (credit limit). Regular payments are made on the loan, but the funds can be advanced throughout the life of the loan. This is different from a revolving line of credit because a credit limit is designed to close at some point in the future.

Issuing a credit limit

Creating a credit limit loan in LMS is straightforward. When you're setting the account up, you'll navigate to the Advanced Configuration page. Change the ‘Loan Type’ field to Credit Limit.

Enter the dollar-amount limit on the Setup Terms page.

The credit limit can be more than or equal to the total loan amount.

To the right, you can enter the Reporting Credit Limit, the number that will be used when generating a credit report.

Flooring

A flooring loan helps a company stock their inventory. For example, a brand new car dealership needs to fill their "floor" with cars. To do this, they could get a flooring loan that funds a large purchase of cars so the new dealership has cars to sell. These loans are typically paid back quickly (most come due around 90 days). A payment on a flooring loan is called a curtailment.

Installment

Installment loans are the most common types of loans. Installment loans can finance many things (cars, technology, etc.).These loans have a definite length and repayment schedule. This means the loan will be repaid by regular, predetermined payments or installments.

Lease

When a customer signs a lease they are not agreeing to pay on the principal value, they are agreeing to make payments that cover the depreciation of an asset. For example, many people lease cars, rather than get an installment loan or purchase them, because cars can lose value over time. Lease payments include a lease charge or a rent charge portion which is how the lender makes a profit. The ownership of a lease is never transferred to the lessee.

Using loan classes and types together

Loan classes and loan types work together in LMS to describe why a loan was given out and how it's being calculated. Every loan has both a class and a type, and using both labels together can give you a more precise description of what kind of loan you're giving out. Consider a few combinations:

• Automotive Installment and Automotive Lease - These two are rather similar, with both involving a borrower getting the loan or lease to finance the purchase of a car. The main difference is in how the loan is calculated, with an installment loan being a gradual purchase over time, with the lease being a long-term rental (sometimes with the option to purchase down the road).
• Consumer Installment and Consumer Flooring - Consider a retailer who sells and finances furniture. They extend consumer installment loans to their buyers, but at the same time, the retailer themselves might take out a flooring loan to finance the initial purchase of their inventory. The same futon might first be collateral in a flooring loan, and later be part of an installment loan. 
• Real Estate Lease and Real Estate Credit Limit - While both of these involve a piece of real estate, they describe very different situations. A real estate lease is usually a person renting a property, whereas a real estate credit limit often involves a person who owns a piece of real estate taking out a revolving loan to finance improvements or upkeep.

Loan setting defaults

System defaults

The system defaults lets you specify the default loan type for each of the different loan classes (automobile, real estate, consumer, other) that you can create inside of LoanPro.

To edit the system defaults, navigate to Settings > Defaults > New Loan > System inside your company account.

Click the black ‘Edit’ button.

Use the drop-down menus provided to select the loan type for each of the loan categories. Once you have made your selections, click ‘Save’. 

Loan specific defaults

There are two main types of loan defaults: loan type specific and user group. Loan type specific defaults let you designate what the defaults will be depending on the loan category and type (e.g. real-estate, installment loan). User group defaults let you create sets of loan defaults and then assign a set to any or all of your agent users. This article will cover loan type specific defaults only.

Loan type specific defaults will let you select settings that are available in the Account Setup area of a loan or lease account. However, you will not be able to default any of the loan terms. If you want to be able to set specific loan terms and settings, you should create a preconfigured loan.

To edit the loan specific defaults, navigate to Settings > Defaults > New Loan > Loan Type Specific inside your company account.

The first thing you should do is choose the loan category (automobile, consumer, real estate, and other) and the loan type (installment, credit limit, flooring, lease) for which you want to set defaults. Once you have done that, click ‘Edit’.

Now you have two sections of defaults you can set: Setup Terms and Loan Settings.

Setup terms

This section is divided into four parts: Loan Terms, Escrow Calculator, Advanced Configuration, and Late Fee Configuration.

Loan terms

The loan terms section lets you set the following defaults:

Escrow calculator

The escrow calculator found within loan setup, calculates how much escrow should be added to each of your account payments.

Advanced configuration

The advanced configuration lets you select options for how interest is calculated and how and when payments will come due and apply on loans.

Late fee configuration

The late fee configuration section lets you choose how late fees should be applied on the loan.

Loan settings

While the Loan Settings section allows you to manage loans individually, you can also use it to set defaults for general loan settings, convenience fees, and portfolios.

Once you have made all the desired changes to the defaults, click ‘Save’. Now when you create a new loan, with this loan category and loan type, the defaults you set here will be the defaults for the loan.