Using AutoPays

Introduction

In an ideal world, lenders could schedule borrower payments in advance, the payments would run as they come due, and loans would get paid off on time. AutoPays attempt to do just that. While there are still the common problems of closed accounts or insufficient funds, AutoPays allow you to schedule payments to process automatically on specific dates or according to the calculated repayment schedule. And, as a lender, you can set up a payment schedule for payments to be processed every month. AutoPays give the options to process recurring payments, single payments, or you can simply choose to process payments as they come due on the loan (this option is labeled "Recurring Match Schedule").

Below, we'll explain how to create new AutoPays, provide use-case examples, and define the terminology associated with the topic.

Scheduling an AutoPay

To schedule an AutoPay, begin by selecting a loan. Within the specific loan, navigate to Servicing > AutoPay. To start the initiation of a new AutoPay, click 'Schedule New AutoPay' in the top right corner of the page. This will bring you to the 'Payment Info' tab which includes the available payment profiles. Select a payment profile and then click the 'AutoPay Info' tab. Here, you will be able to determine multiple settings. We recommend clicking the calendar icon since it allows you to select specific dates and displays when the regular payments on the account are due.

The AutoPay Info tab is where you can determine the following information.

Field

Description

AutoPay Name

This is the name of the AutoPay that distinguishes it from others on this loan. For example, "Regular Monthly Payment".

Payment Profile Type

Whether the payment profile is a bank account or credit/debit card.

AutoPay Type

This is the type of payment with the following options:

  • Multiple Payment - This allows you to manually select individual dates that are different each month.
  • Recurring Payment - This allows you to manually select dates that you want your AutoPay to be processed, and these reoccur on the same day each month.
  • Recurring Match Schedule - This sets the AutoPay date as the loan's regularly scheduled payment date.
  • Single Payment - This is a one-time payment that does not reoccur, and you can manually select a date and amount.

Pay Extra Towards

This tool allows you to pay extra towards interest or principal if the AutoPay amount is greater than the payment amount from the loan setup.

Apply Date

The first apply date for the AutoPay. Depending on the AutoPay Type, this might be a field that lets you select a date (or dates), or it might be set as the next payment date from the loan's payment schedule.

Process Date

The first process date for the AutoPay, which must be at least one day before the Apply Date. Like the Apply Date, it might be an editable field or preset depending on your AutoPay Type.

Amount Type

Whether the amount will be calculated from loan values or something you manually input. The options are Fees Due, Next Due Amount, Next Period, Amount Past Due, P&I Past Due, and Static. Static allows you to put in any number.

Amount

This is the amount that is going to be processed every month on a specific date.

Frequency

If the AutoPay type is Recurring Payment, this field lets you determine how frequently the AutoPay will run. If the type is Recurring Match Payment, this shows how frequently it will run, but you can't edit the field; it's determined by the frequency you entered in loan setup.

Recurring Periods

If the AutoPay type is Recurring Payment, this lets you select how many payments the AutoPay will run. If it's a Recurring Match Payment, this will display the loan term from loan setup.

Payment Allocation Tab
When setting up an AutoPay, some loans may have a tab labeled 'Payment Allocation' meaning that this loan is linked to another loan, and payments can be split across the loans. Only linked loans or parent loans will have this tab. This section allows you to allocate a portion of the payments between the two loans.

Review and Confirmation

The Confirmation tab shows a summary of the information you've entered. Review the information to ensure it's accurate, and click 'Finish' when ready.

Your scheduled AutoPay will now be listed in the AutoPay Manager.

The switch between Standard Time and Daylight Savings Time can impact any AutoPays that were scheduled before the change. For more information on the issue and how to resolve it, see our article on Daylight Savings Time.

Common Uses

AutoPays are an easy and efficient way to initiate payments since lenders won't have to manually enter in payments every month. They also help make customers aware of when a payment will occur every month. Automatic payments are likely to reduce the amount of missed payments since the funds are automatically pulled from a customer's account at each given date.

However, AutoPays may not work for all lenders and their borrowers. As you may have experienced as a lender, some customers might not want to use AutoPays. Some feel uncomfortable handing their lender the power to pull money from their account. Others might not have a bank card or bank account set up and wish to only pay in cash. It is also important to note that some lending regulations prohibit you from initiating transactions in certain circumstances, like the CFPB's Small-Dollar Rule.

Lenders use AutoPays mainly to process payments on a regular schedule. The most popular option is Recurring Match Schedule.

Lenders who process NACHA payments will use the AutoPay feature to add payments to batches. Batches are then sent as a flat file to their processing bank. The difference when using AutoPays in this way is that the movement of money must be initiated outside of LoanPro.

Lenders like the AutoPay feature because the event-based notifications AutoPay Created and AutoPay Failed make it easy to communicate automatically with customers about their payments.

Terminology

Here are some common terms used with automatic payments:

Term

Description

AutoPay Date

This is the date when an AutoPay payment will apply (signified by purple dots on the calendar).

Next Due Date

This is the date of when the next payment is due (signified by yellow dots on the calendar).

Regular Due Date Payment

This is the regular date of when a payment is due (signified by blue dots on the calendar).

What's Next

This article covers the extent of our material on AutoPays. But if you'd like to learn more about other types of payments, we recommend checking out our Payments article.


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