Loan Basics

For a brief understanding of what loan processing means you should know that each loan has three main steps to its life span: pre-qualifying, origination and servicing. These are the three main stages a loan goes through from its request to its full recovery.

 

Pre-qualifying a loan is the full responsibility of a loan officer who is supposed to gather as much information about a potential client before being able to help him finance a project or another. In his task of helping a potential client either buy a house or a car he must keep risks at a minimum and maximize the returns on the investment. The information he is required to gather from the potential client refers to his income and how steady it is, his monthly expenses, his assets and employment history, the current debts, the value of the loan and any recommendations which will add to the clients willingness and ability to cover the loan payments while not passing the set dead-line. Each financing institution and loan officer has a preset of values from which to determine eligibility and one such institution may grant you the same loan another company would not. Usually all financing companies make use of similar commercial loan software however they can guide themselves on different credit scoring models, from payment-to-income to debt-to-income. 

 

Loan origination follows the eligibility test and it actually means setting the loan amount payments and deadlines so that the borrower can have access to the highest amount of money he can get from the financing companies without it being a risk for payment delay while the loaner sees the biggest profits from its investment. In order for all this to be safe, the values and time frames have to comply to specific finance laws and regulations and usually a loan software will make sure that the loan officers offer is lawful and feasible while corresponding to all the regulations issued. The loan origination step evaluates the correctness of all the paperwork and the rapport in between the money granted and the payments set as to make sure the following steps will develop undisturbed. 

 

Servicing the loan regards actually following through the steps and payments of the loan and adjusting the interest rates according to the global economical situation, to the clients requirements, changing data to the loan when changes interfere in the borrower’s life, changing the loan terms as to match any new rules or regulations issued by the government and in general keeping an eye on the incident-less development of the loan recovery. This is also best left for a loan software which will provide valuable daily, weekly and monthly reports for best monitoring all payments and loan progress.