Loan Terms

Introduction

It's easy to create a new loan inside of LoanPro's LMS, and the options there can help you configure loans exactly as you intend. This article will cover entering loan terms into LoanPro and each loan term individually, so the reader gets a sense of the configuration options that are available.

Loan Terms

To enter loan terms in LoanPro, navigate to Account Setup > Setup Terms inside the loan.

Click 'Save & Calculate' to save the terms you've entered and calculate the finance charge, payment schedule, and APR based on those terms.

The following loan terms can be entered:

  • Total Amount - This is the total principal balance for the loan excluding any underwriting fees.
  • Discount - Also called lender’s fee, this is an amount held back when funding the loan that will be profit to the lender once the loan is repaid. You can choose how this amount gets repaid in the advanced configuration.
  • Interest Rate - This is the rate that will be used to calculate interest accrual on the loan. This is not the same as APR. You can choose the time period over which the interest rate applies. The options are: Annually, Semi-Annually, Monthly, Bi-Monthly, Weekly, and Bi-Weekly.
  • Underwriting/Refinance Fee - This is a fee charged to the borrower to get the loan. This fee will be financed as part of the principal balance of the loan.
  • Contract Date - This is typically the date when the loan contract is signed and is used to mark the date when interest accrual will start on the loan.
  • First Payment Date - This is the date when the first payment will come due on the loan. You have the ability to change the first due date on the loan using the Change Due Date setup tool. If you choose to change the first due date, it will affect the calculations on this loan, including the APR calculation that was set at the time of activation.
    If you wish to see the effects of a changed due date in real time, please use the Setup Terms tab to inactivate the loan and change the first due date. Using the Change Due Date setup tool will have the “true” APR, and will differ from the quoted one as shown on the Setup Terms tab.
    Above this field, LoanPro displays the number of unit periods and the number of odd days. These numbers are only important in the calculation of APR, but if you’re familiar with how APR is calculated, they will help you understand the calculation method LoanPro is using.
To the right of this field, you will see a    icon. Click this icon to add additional curtailment (payment) dates to your loan schedule. This is most valuable for flooring loans when payment dates don’t occur on a regular frequency. Additionally, there is a    icon. Click this to apply a template of additional curtailment dates.
  • Payment Frequency - This is the frequency with which loan payments come due.
  • Term - This is the number of loan payments that will be made on the loan. This means that the total length of the loan will depend on the payment frequency. If the frequency is weekly and the term in 12, the loan will be scheduled to last 12 weeks.

Customer Use Cases and Questions

There are a lot of potential use cases for loan terms, because they define the way loans will work. LMS is great for most loan types, and excels in servicing B2B, auto, consumer, point-of-sale, and small-dollar. We encourage any lender who has questions when configuring their loans to reach out to support@loanpro.io with questions.

Can I configure loans so that payments come due every day? Yes, LMS offers many payment frequencies including every day or every business day.

Can I remove access from some users so they can't set up new loans? Yes, LMS lets you configure user roles and grant access only to the things a user with that role needs.

Does the setup of loan terms support the kinds of loans I give? Likely yes. LMS is very versatile and supports most loan types. LoanPro is agile, and we add features and support for new loan types regularly.

How can I streamline this process? Yes, you can. We recommend that lenders configure most of their loan setting selections as defaults so only minimum configuration is needed when a new loan is created.


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