Create New Loan Standard Method
Creating a new loan correctly is very important. It’s also important to understand all the loan settings available so that the loan you create will perform the way you expect it to. The most important considerations when creating a new loan are interest calculation and payment application. Since the topic of creating a new loan is so large, only the basics of loan creation will be covered here. Click any of the links in this article to learn more about a specific topic. Check out other articles with the "Create New Loan" tag for information on peripheral aspects of loan creation, such as adding collateral or insurance information.
There are three ways to create a new loan. You can create a preconfigured loan, create a loan using the custom boarding process, or create a new loan using the standard method. Since preconfigured loans and the custom boarding process only serve to customize and make the loan creation process more convenient, this article will cover the standard loan creation process. This will give the foundational basis needed to create a new loan using any of the three methods.
To create a new loan by the standard loan creation process, navigate to Loans > Loan Manager inside your company account.
Choose "Standard" from the drop-down. This will take you to a page where you can choose the general category of loan you give. The four groups will be represented by the following images:
Choose the category that is most appropriate. Generally, if you give unsecured loans or loans on collateral that is not motor vehicles, homes, or consumer goods, choose “Other.”
The first step in creating a loan is to configure the loan. This includes entering basic information about the collateral, core loan information, and loan grouping. First, let’s take a look at the loan ID. The Loan ID field is disabled by default. You can choose to enter a custom ID from the Loan ID Option drop-down. If you want the system to automatically assign a loan ID like it usually does, but you want to customize how the IDs get assigned, you can customize the numbering in Settings > Loan > Labeling > Custom Numbering.
You will be asked for different collateral information depending on the type of loan you are creating. If you choose to create a Consumer or Other loan, you will be able to choose if the loan is secured by collateral from the "Secured Loan?" drop-down.
Core Loan Information
In the first step of the loan creation process, you will specify a Loan Type and a Calculation Type. Here are your options:
- Loan Type – This gives a general idea of how the loan will be repaid.
- Credit Limit – With this option, the customer has a credit limit and can both repay the loan and receive additional advancements up to the credit limit.
- Installment – This is the most typical option. Mostly-uniform payments will be repaid over a specified loan term.
- Flooring – This type of loan is given to a company to finance the company’s inventory. Payments are called curtailments and the loans are usually short term.
- Lease – A typical lease is typically renting an automobile to a customer. Payments are calculated using the typical lease payment calculation.
- Calculation Type – This option helps determine how the interest portion of a payment will be calculated.
- Interest Only – This option will calculate payments equal to the amount of interest that accrues on the loan balance in a single payment period.
- Rule of 78s – This option will use the rule of 78s interest calculation.
- Simple Interest – This option will calculate payments and interest in the standard way. Interest on the loan and interest allocation of individual payments will change depending on whether payments are made on time.
- Simple Interest Locked – This will calculate interest in the same way as Simple Interest, but the borrower will only pay that amount of interest, no more, no less.
You have three grouping options available at this stage of the loan setup:
- Source Company – The company that referred the customer to you.
- Portfolios – Groupings that you create for your accounts.
- Agent User – An employee within your company assigned to the loan.
Once you have filled out this information, click .
The second step in the standard loan creation process lets you assign a customer to the loan. This step is not required, but it is very likely that you will want to assign a customer. You can either create a new customer or you can link an existing customer. To create a new customer, click the ADD NEW CUSTOMER button and enter in the customer’s information. To link an existing customer, click the LINK EXISTING CUSTOMER button.
Click the checkbox to the right of the customer you want to link, then click . When you are done, click . This will create the new account in your system. Now you will need to enter data about the loan.
Enter the loan data for each of the categories: Loan Terms, Escrow Calculator, Additional Information, Advanced Configuration. Once you have added the information, click “Save & Calculate.” This will save your loan data and calculate your schedule of payments and APR.
If the calculated schedule of payments isn’t what you expected it to be, or if you need some of your truth in lending numbers to be different, you can use some of LoanPro’s tools to help you calculate the payment amount, payment schedule, or APR that you need.
If your target is a payment amount, you can use the Roll Payment tool. This tool will let you choose which of your loan terms to alter in order to arrive at a specified payment amount.
If you want to alter the payment schedule, you can use either the schedule roll tool the force tool or the smooth tool. These will help you customize your payment schedule including payment amount and interest rate. You can even choose to have varying payment amounts and interest rates each payment period.
If you need to have your APR be under a certain percentage in order to meet legal requirements, you can use the APR Targeting tool. This tool lets you specify an APR and will then alter either the interest rate or escrow total on the loan to arrive at the closest APR without going over.
Once your loan has been saved and the numbers calculated, active the loan by clicking .
Now you can add any additional information you want about the loan by navigating the different loan tabs.