Find the best Loan Servicing Software

On this page:

• What is loan servicing software?

• What are the core features of loan servicing software?

• What are the benefits of loan servicing software?

• What are the potential issues with loan servicing software?

• How much does loan servicing software cost?

• What is loan servicing software used for?

• Which tools integrate with loan servicing software?

• Considerations when purchasing loan servicing software

What is loan servicing software?

Loan servicing software helps loan lending businesses manage the lending process from loan origination to payoff. It automates the processes involved in billing borrowers, processing payments, and managing account balances. This software also handles tasks such as calculating interest, generating statements, and reporting for compliance.

Loan servicing tools ensure loan payments are collected on time by sending reminders to borrowers and updating records instantly when payments are received. Additionally, loan servicing software helps manage customer inquiries and service requests, providing a centralized platform for communication.

What are the core features of loan servicing software?

• Borrower management: Allows lenders to maintain comprehensive profiles for each borrower. This includes tracking loan balances, payment histories, and personal information. It facilitates efficient management of loan accounts and enhances customer service by providing quick access to borrower details.

• Loan processing: Automates the evaluation and approval of loan applications. It collects applicant data, assesses creditworthiness, calculates risks, and determines suitable loan terms. This feature speeds up the decision-making process, ensures consistency in loan approvals, and helps you accurately manage a larger volume of applications.

What are the benefits of loan servicing software?

• Automates payment scheduling and tracking: Loan software allows you to set up and monitor recurring loan payments. It automatically updates payment statuses and balances as borrowers make payments, ensuring your records are always up to date. This automation reduces manual entry errors, helps you maintain accurate financial records, and ensures timely payment collection. 

• Reduces paperwork and manual tasks: Loan software digitizes records and automates routine processes. It eliminates the need for physical documents and extensive manual data entry, reducing errors and saving time. This efficiency allows you to focus on more strategic tasks and improves service quality for borrowers.

• Enhances borrower communication: Loan management software provides automated notifications and easy access to loan information. It sends timely updates about payment schedules, due amounts, and account changes directly to borrowers, keeping them well-informed. This transparency improves your relationship with customers, encourages prompt payments, and reduces inquiries, helping you manage communications more effectively.

What are the potential issues with loan servicing software?

• Payment processing errors: Payment processing errors in loan servicing software can occur due to glitches or data entry mistakes, leading to incorrect payment amounts or misapplied funds. These errors disrupt your financial records, dissatisfy customers, increase operational costs, and lead to compliance risks. Addressing these discrepancies promptly is crucial to ensure accurate accounts and trust in your loan management processes.

• Limited customization options: Limited customization options in loan management software may restrict your ability to tailor features to your specific needs. This can lead to inefficiencies in managing diverse loan types or unique borrower situations. Ensuring the software can adapt to your specific operational requirements is essential for optimal performance and satisfaction among your team and borrowers.

• Inadequate data security: Inadequate data security in loan servicing software exposes you to risks of data breaches and unauthorized access to sensitive information. This vulnerability can compromise borrower trust and lead to legal repercussions. Ensuring robust security measures is crucial for protecting your data and maintaining the integrity and confidentiality of your and your borrowers' information.

How much does loan servicing software cost?

Most loan servicing software solutions on the market are priced on a “per user per month” basis, and their entry-level pricing plans range from $25 to $99+.* An enterprise-level event loan servicing system that’s priced higher may include additional features, such as accounting, audit trail, portfolio management, commercial lending, and consumer lending.

*The pricing included is for the entry-level/lowest-priced offerings found on vendor websites as of June 21, 2024.

What is loan servicing software used for?

Loan servicing software is typically used to manage and automate the processes involved in servicing loans. However, this software can have multiple use cases based on the data fed into the system and the tool's features leveraged. Some of them are:

• Interest calculation: Loan servicing software automatically calculates interest on loans, ensuring accuracy and consistency. This feature helps you manage varying interest rates and compounding periods efficiently, reducing the risk of errors in interest application and improving overall financial management.

• Loan modification and restructuring: Loan servicing tools allow you to modify and restructure existing loans directly within the software. Adjusting terms and conditions as necessary to accommodate changes in borrower circumstances or economic conditions helps you manage financial risk and retain customers.

• Credit reporting: Loan servicing software can integrate with credit bureaus to automatically report loan payment histories. This feature ensures that borrower credit reports are regularly updated and reflect their true credit activity, which is crucial for maintaining the accuracy of credit scores.

Which tools integrate with loan servicing software?

A loan servicing system can integrate with various tools to optimize loan lifecycle operations. We looked at thousands of reviews from users of loan servicing software to identify products that users frequently mention integrating with their loan servicing tools:

• Microsoft Excel is a spreadsheet program used for data organization and analysis. Integrating it with loan servicing software allows you to effortlessly export data for advanced analysis, customize financial reports, and enhance data visualization. 

• QuickBooks Desktop Pro is an accounting software. Integrating it with loan servicing software simplifies financial management by automatically syncing loan payments and accounting entries.

• Docusign is a digital signature platform. Integrating it with loan servicing software enables the electronic signing of loan agreements and documents, speeding up the approval process. 

• Stripe is a payment processing platform. Integrating it with loan servicing software facilitates efficient payment collections directly within the loan management system. 

• SAP Crystal Reports is a reporting tool that creates detailed and actionable business reports. Integrating it with loan servicing software enhances your ability to generate precise, customizable financial reports and analytics.

We identified these integrations mentioned most often in verified reviews of loan servicing software published on Software Advice within the past two years (as of June 21, 2024).

Considerations when purchasing loan servicing software

• Check the vendor’s compliance with financial regulations. Compliance with financial regulations ensures the software meets legal standards and protects against penalties. This compliance safeguards your operations by maintaining up-to-date data security, privacy, and financial reporting practices. Verifying this helps you avoid legal complications and ensures your loan processing adheres to current financial laws, protecting your business and customers’ interests.

• Evaluate the capability for automated payment scheduling. Automated payment scheduling ensures efficient and timely collection of loan repayments. This feature helps you manage cash flow better by automating the billing process, reducing the likelihood of missed or late payments. It also improves your borrower's experience by providing consistent payment reminders, helping them stay on track with their financial commitments, and maintaining good standing on their loans.

• Assess the quality of customer service tools. Robust customer service tools, such as an automated response system, ticketing system, and communication channels, ensure you can effectively support and respond to borrower inquiries. Good tools enable you to manage communications efficiently, resolve issues promptly, and maintain high satisfaction levels. This capability is vital for building trust and retaining customers, as responsive and helpful customer service significantly impacts borrower experience and loyalty to your financial services.

Source

Products evaluated for the pricing calculation were taken from Software Advice’s loan servicing software directory. The pricing ranges exclude freemium versions of the products. The features highlighted were identified based on their relevance and the percentage of products in Software Advice’s directory that offer them.

Disclaimer: This loan servicing software buyers guide was authored by Software Advice’s content team. We develop our guides using the author’s expertise, insights from 2M+ unique user reviews, and our proprietary data science algorithms to identify trends in user sentiment, preferences, and priorities. Some text was generated with assistance from AI tools.