Is your LOS pointing the right way?

If you’re looking to update your Loan Origination System, navigating a labyrinth of facts, figures and protracted descriptions of what different providers can do is hardly going to make you excited about the potential benefits you can gain by taking the plunge.

To highlight what your system should be doing for you, we’ve distilled some key benefits for your data capture, underwriting and funding processes to make your decision faster and easier— just like a quality LOS should.

Capturing Data

Finding the correct details for a customer or adding new information to your database should be the least of your problems when putting together a deal. Moreover, swift and accurate data capture is at the heart of a business that operates smoothly.

First and foremost, you want a means to integrate customer data across various databases and to immediately recognize customers as existing or new, positioning you to better tailor individual deals.

Resolve the issue of separate databases not coordinating with each other across branches by letting an online LOS instantly synchronize features and capabilities between lender and dealer.

An effective system should differentiate between different types of collateral. For example, the data captured for a trailer or an RV would be very different from a motorcycle, and your solution should intuitively reconfigure itself across valuation systems dependent on the collateral type – saving you the manual effort.

Data capture with a quality LOS means less overall time spent on data entry. So when that customer wanders in for the third time this week to ask more questions and add a jet ski to their collateral, you’re already prepared to pull up their details pronto and let the system do the rest.

Underwriting

For consumer finance offerings, it’s vital that a fully-featured origination system automatically enforces complex rule sets, such as fees, charges for ancillary products and risk management steps.

This should be flexible dependent on various differentiators, such as the lender’s state jurisdiction, intra-state variations and the amount of money involved; if it’s not configurable in this way, you’re immediately exposed to significant legal risk.

For businesses focused on providing auto finance capabilities, your LOS must have particular flexibility around tailoring different programs for different jurisdictions, as well as coverage of OEM subvention.

Your system must be able to make sure that all pertinent data synchronizes with the Point-of-Sale (POS). Underwriting information entered by a dealership must be accessible on the system and reflected in the LOS without losing time having to reach the lender on the phone. While some dealers might employ phone-based negotiations, picking up the phone needn’t be an essential step to building scenarios and deals if the software is utilized effectively.

Real-time savings for consumer and auto finance come into play when you’re able to automate what your employees spend the most time on, particularly straightforward approvals and declines, which should be easily managed by a quality loan origination solution.

This can also apply to configurations for risk management. Software that can integrate externally-purchased scorecard attributes into a custom scorecard to automate your risk processes reserves your resources for key analytical tasks that necessitate the additional brainpower. By purchasing your scorecard attributes, you can also enjoy the added assurance of knowing that scorecard is customizable based on requirements as well as legally compliant.

Read more about the new tools for an effective risk management process here.

Funding

There are two main aspects of what a LOS can offer to your funding operations. The first is the ability to hook into electronic contract providers to sort images and data into the system; the second is the capacity to act on rules to verify their content, with both independent of manual input.

You’re not necessarily verifying the documentation itself, but the customer’s identity, such as ID, income, employment and residence details. It’s vital that the information provided matches that provided at the point the contract was signed.

An LOS will have rules to allow you to do all this manually, but for optimal speed and performance, it should be possible to integrate a variety of external services to complete this process almost instantly. E-signature inclusion is only the start for the potential to revolutionize your funding approval process.

For auto lenders, imaging systems, such as Dealertrack or Routeone eContracting, can be integrated to automate the verification of customer documentation content. Likewise, for consumer finance businesses, your LOS should allow for contract template configuration. To save you both time and money, you can look at providers such as Wolters Kluwer Expere or Carleton Docs, who can work with your software to take the burden of configuring your contract templates and ensure you remain compliant.

A possible limitation of this is that the upkeep and regulation of the document templates that pull this information into the LOS is one of the more labor-intensive processes – but outsourcing this work means you barely have to lift a finger.

If you employ integrated imaging services to handle the maintenance of these document templates directly, you’ve saved even more time, and you can avoid the additional burden of having to continually update them and ensure compliance.

Finally, for consumer lenders, the borrower must be paid immediately. Your LOS should split the proceeds and allow you to print a check or send ACH details to your servicing system. You may provide your customers with a 3rd option, i.e. a prepaid debit card, giving them immediate access to the funds without waiting for the day or two required for other methods.

Ultimately, a good origination system should be giving you a shortcut to completing your most time-intensive tasks, reducing errors and improving efficiency all at once.

How is yours currently holding up?

 

Next steps

Capture the right data and make the right credit decisions fast. CALMS enables you to seamlessly manage and maintain the entire contract lifecycle.

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