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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 dates or according to the calculated repayment schedule. They can also be used to set up a one-time, future-dated payment.
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.
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. To process payments automatically, the customer must have a payment profile set up through Secure Payments.
You might have used automatic payments before in other software systems. Most automatic payments pull funds on schedule until either the loan is paid off it is manually cancelled. This method sometimes works, but it can cause problems. LoanPro's AutoPays will only schedule the next automatic payment if the previous AutoPay was successful. If you create an AutoPay with twenty payments, it will still only schedule them one at a time as each individual payment succeeds.
However, there are features that can be set up to try multiple profiles or try multiple days before the payment will fail.
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.
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.
- AutoPays are not promises. AutoPays are a tool for initiating an actual payment, moving money from a borrower to you. Apart from AutoPays, LoanPro has tools for tracking when borrowers promise to make payments, upload documents, update information, or anything else you might need from them. Both tools can be used in tandem to note when a borrower promises to pay and then set up an actual payment for them. For more info, check out Intro to Promises.
Now that you know about AutoPay, you are ready to set them up in the software. Our articles Schedule a New Autopay and AutoPay Manager are good starting places for setting up AutoPay. If you need a refresher on how payments generally work in the software, check out Logging Payments.