AutoPays 101

Complexity:    

Audience: Loan Servicer or Collector, Upper Management, Developers, Accounting, Loan Servicing/Collections Managers, Administrator, Compliance, Data

Introduction

AutoPays can reduce your workload and help your borrowers make their payments on time. In LMS you can set up payments that will process automatically on specific date or according to the calculated repayment schedule. This article will introduce you to the AutoPay feature and explain how it functions. If you already understand AutoPays and want to start scheduling them, read Schedule a New AutoPay.

What are AutoPays?

An AutoPay will automatically process a payment on a loan. It can be set up to match the payment schedule or it can be customized to process on a specific date for any amount. The most popular option is Recurring Match Schedule. To process payments automatically, the customer must have a payment profile set up through Secure Payments.

You might have used automatic payments before. Most automatic payments are set up and then they pull funds on schedule until the loan is paid off or until it is told to stop. This method works for some people, but it can cause problems for lenders. LoanPro's AutoPays will only schedule the next automatic payment if the previous AutoPay was successful. However, there are features that can be set up to try multiple profiles or try multiple days before the payment will fail.

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.

Multiple Payment Profiles

A borrower may have multiple payment profiles on their account. When setting up an AutoPay, you can designate up to three profiles to try before the payment will fail. You can select a primary profile that will always be tried first, then you can designate a first and second alternate.

Multiple Attempts

Sometimes, an AutoPay might not be successful because of nonsufficient funds, or other problems with the payment profile. AutoPay has a setting that will allow the payment to retry once a day for up to five days. This will try each of the payment methods and any alternates. Lenders who are subject to the Small-Dollar Rule should be careful when using this feature, as the rule prohibits lenders from trying to pull funds from an account that has had two consecutive failed payments.

If an AutoPay is set up with multiple attempts and multiple payment profiles, it will try each profile every day. The AutoPay will stop trying to pull funds either when the payment succeeds, or if you reach the number of retry attempts you specified. At maximum, an AutoPay could try six attempts (one initial try and five retries) on three different profiles, meaning eighteen attempts total.

Where do AutoPays Fit?

AutoPays reduce the risk of missed payments because lenders don't have to rely on the borrower to remember to make their payment. It's also convenient for your borrowers, who won't have to worry about forgetting a deadline and accidentally missing a payment.

This Feature is Not

AutoPays do not guarantee that a payment will be made on a loan. The borrower must have sufficient funds to make the payment in order for the AutoPay to be successful.

What's Next?

Schedule a New AutoPay: Instructions for creating a new AutoPay.

AutoPay Manager: How to view all of your scheduled AutoPays.

Payments – Intermediate: Learn how to manually log payments.


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