Scrutinizing Software: Choosing a Product for Your Loan Business

Recording loans. Collecting payments. Tracking data. Creating statements. Businesses that handle 10 loans or 10,000 loans require many of the same functions from loan servicing software… but each lender has individual needs.

When you're looking for a loan program — whether it's a new venture, or the old software isn't cutting it anymore — take time to investigate what's on the market. As you examine each product, find answers to the following questions. They'll help you choose software that's efficient and effective for you.

     1. Is the software sufficient…both now and later?

This is the most important yardstick. Make sure the software covers all aspects of your loans, especially if you go beyond basic lending. Essentials include:

• Loan types: Is the product appropriate for all your lending options? (For example, personal, business, auto, home, student, title, or payday loans)
• Documentation:  

                -What are the format choices for income and status reports?

                -Are tax forms offered?

                -Is Metro2 reporting for credit bureaus available?

                -What kinds of statements can you create for borrowers?

                -Can you print payment vouchers?

• Features: Does the software have enough flexibility? Consider all the tasks you do, such as:

                -Changing interest rates

                -Managing late payments and delinquent loans

                -Tracking escrow receipts

                -Accepting debit and credit payments

                -Enabling multiple lender loans

                -Calculating payoffs

                -Connecting multiple computers

• Longevity: While you're trying to meet current demands, think about the future.

                -How much do you plan to grow in the next few years?

                -Can the program cope with expansion? 

     2. Is it affordable?

Loan software varies significantly in price. Compare costs and capabilities.

     3. Would your current setup support the program?

Unless you're planning on spending more money, make sure the product works with your existing hardware and software. What platform is appropriate? Processor? Speed? Operating system? Look at compatibility. Are import and export capabilities suitable?

     4. How easy it is to use? What do your loan specialists think?

There's going to be a learning curve for any software, but you want your loan program up and running within a reasonable amount of time. Many have demos to give potential users hands-on experience. Try a few, and see what you think. If others in your company will use the product, let them experiment, and get their feedback. 

     5. Where is information stored?

Do you plan to store data within your system? If so, how much space is required? Is off-site storage offered? What's the fee?

     6. What's tech support like?

Are there videos to walk you through a program? Check out online user guides. If you have a question about a product, how does the software company handle it? Is there phone and email support? What are the hours? Which time zone?

     7. How is the software updated?

Financial and tax regulations sometimes change. Naturally, you want to stay on top of them. When was the loan program developed? If it's been a while, was the software updated? Are future updates included in the original price? How will you know when an update is available?

Reading reviews of loan servicing software might be helpful, but, ultimately, you should find a product that matches your needs. Take time to explore top contenders. Which one will keep your loan business running smoothly? That's the winner.