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. Some other relevant articles are found in the folders for Collateral and Insurance and Customers.

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.

How To

To create a new loan by the standard loan creation process, first open up the Loan Manager inside your company account.

Click 'New Loan' and 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 with collateral that is not motor vehicles, homes, or consumer goods, choose 'Other'.

Configuring a Loan

The first step in creating a loan is to configure it. 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 system will assign the loan ID field by default, but you can choose to enter a custom ID from the 'Loan ID Option' drop-down.

Automatic and Custom Loan IDs
Custom loan IDs are useful because they can store information. Auto lenders might want a Vehicle Identification Number (VIN) to be a part of each loan ID, or lenders might want a prefix or suffix showing the associated Source Company. Automatic IDs are obviously useful because the system manages everything. With Custom Numbering, you get the best of both worlds — the system will automatically generate loan IDs that look exactly how you like. Custom numbering is set up in Settings > Loan > Labeling > Custom Numbering.

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. These options are explained with more detail in Loan Type.

  • 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. These options are all covered with more depth in Calculation Type.

  • 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.

Grouping Options

You have three grouping options available at this stage of the loan setup:

  • Source Company – The company that referred the customer to you, or the brick-and-mortar location where the loan originated.
  • 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 'Next' in the bottom right hand corner.

Assigning Collateral

On the next screen, you can enter collateral for the loan. If the loan is unsecured, just hit 'Next' again. If it is secured, click 'Add Collateral'. Regardless of the type of loan you selected, you can choose from Automobile, Consumer, Real Estate, and Other collateral types, which each bring up several fields to input collateral information. (These fields can be customized for each type — see our article Using Collateral Fields.)

If the loan is secured with more than one piece of collateral, you can hit 'Add Collateral' again. You can link a single loan with up to 50 items. Once the collateral info looks good, hit 'Next'.

Assigning a Customer

The third 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 'Add Customer' and enter in the customer’s information.

To link an existing customer, click 'Link Existing Customer'. This will pull up a list of all the customers you've entered into the system. Click the checkbox to the right of any customers you want to link, then click 'Link'.

When you are done creating or linking customers, click 'Save' in the bottom right corner. This will create the new account in your system and bring you to a page for entering loan data.

Loan Data

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.

Payment Amount

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.

Payment Schedule

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, click the Activate button in the lower right corner.

Now you can add any additional information you want about the loan by navigating the different loan tabs.

This includes customer information, payments, charges, collateral information, insurance information, and more.

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