Loan Origination Software Pricing & Licensing: Top Considerations

Loan origination software pricing representation

With the widespread adoption of cloud-based software, new factors must be considered when negotiating loan origination software pricing terms. Our advice: adopt a holistic, long-term economic perspective, and you’ll get the loan origination software licensing you need without paying for anything you don’t.

Loan Origination Software Pricing & Licensing Considerations


Moving to modern loan origination software hosted by a cloud provider has many benefits. To prepare for that transition, we pose questions to help you think about pricing, licensing, and long-term success. You’ll want to work with a vendor whose loan origination software pricing/licensing offers flexible terms to meet your unique financial requirements. The table below summarizes different pricing options.

Loan Origination Software Pricing: Advantages and Disadvantages
Pricing Advantages Disadvantages
Monthly ✔ Lower initial up-front payment

✔ Easy to adjust or cancel subscriptions based on application volumes

✔ Easier to test out the service without a long-term contract

✔ Closer connection between payments and software value

Higher cost per month compared to longer terms

Risk of price increases without locked-in rates

May result in higher total cost over time

Quarterly ✔ Cost savings compared to monthly

✔ Fewer billing cycles

✔ Potential discounts for longer-term commitment

Higher cost per billing cycle than annual

Limited flexibility in adjusting subscription mid-cycle

Annual ✔ Cost savings compared to monthly and quarterly

✔ Predictable budgeting for the entire year

✔ Potential for additional discounts and perks

Higher upfront cost compared to monthly and quarterly

Limited flexibility in adjusting subscription mid-cycle

Monthly Payments

If you would like to distribute expenses throughout the fiscal year or don’t have the budget for a big up-front licensing payment, then monthly subscription payments are the ideal option. You may also opt for a monthly payment plan based on expected loan application volumes. This provides flexibility by matching payments to loan volumes as they vary throughout the year. With monthly payments, your CFO makes a close connection between payments and the value of the loan origination software that is the backbone of your lending business. For their part, software vendors welcome the predictable monthly revenue stream.

Quarterly Payments

This is an excellent option if your accounting department’s goal is to reduce the number of annual payment transactions. Compared to monthly payments, you’re likely to get a better deal, thanks to the time value of money. Alternatively, you may select a payment plan based on the quarterly volume of application loans. This plan can be ideal for accommodating differences in monthly volumes during any quarter. This option allows you to handle varying monthly loan volumes as long as the total for the quarter doesn’t exceed the maximum quarterly volume in your contract.

Annual Payment

If you have ample cash flow or have been budgeting for the transition to cloud-based loan origination software, then the “once and done” annual payment offers the simplest payment scheme. Compared with monthly or quarterly payments, your annual cost should be lower. An annual plan based on loan application volumes may offer the most flexible and economical approach. Like the quarterly plan based on volume, you can opt for a payment plan based on estimated annual loan application volumes. An annual payment also tells your software provider that you take a long-term approach to this vendor relationship. As a result, you might find that the vendors offer additional perks throughout the contract.

Additional Services, Capabilities, and Programs to Consider


The monthly/quarterly/annual software subscription and support costs may include additional offerings. When comparing vendors, consider the value of the other services, capabilities, and programs that may be included or priced separately.

Ask your vendor which of the following they provide, which are included in the software pricing, and which are extras. You’re making a multi-year investment in loan origination software, so you’ll want to decide based on the long-term value of the software, support, and services as a complete package.

  • Consulting: Your lending practice is unique, and you may need anywhere from a small number to many hours of consulting to achieve the desired results. Does the vendor include a certain number of consulting hours as part of the initial implementation? What options are offered for additional consulting, if needed?
  • Integration: Loan origination software doesn’t work in isolation. Is the software pre-integrated with popular lending services such as application sources, bureaus, alternative data, and vehicle valuation, or will it require custom programming that may lead to a protracted implementation? Does it have application programming interfaces (APIs) and the ability to build and modify integrations on the fly?
  • No-Code Configuration: Out-of-the-box software rarely meets your exact needs. Does the software allow you to quickly and easily configure the software to your needs using no-code configuration, or does configuration require a statement of work and weeks to months of custom software development?
  • Training: Is it provided online and self-paced, on-site so your employees don’t need to travel, or will employees need to travel to vendor offices?
  • Automation: Modern loan origination software leverages automation to simplify processes and speed up application approvals. Does the software support automated decisioning, automated conditioning, automated deal structuring, and automated funding? 
  • Modern UI: A user-friendly user interface is critical to a positive user experience, which means repeat customers. Does the software offer a clean, consistent, simple, and responsive UI for various browsers and screen sizes to provide a personalized experience?
  • Pricing Matrices and Models: Does the software support complex pricing matrices and models so client system admins can quickly modify the pricing in response to unique business and system needs?

Cloud Has Changed CapEx and OpEx Models


For decades, enterprises assumed responsibility for the complete lifecycle of computing and communications hardware: selection, purchase, installation, configuration, management, upgrades, and decommissioning within their data centers. With the cloud, the service provider now assumes most of these responsibilities and expenses. Moving from outdated lending software to modern cloud-based loan origination software, you no longer have to include CapEx items for new hardware in your budget.

The move to the cloud also reduces lenders’ OpEx costs. Physical space devoted to servers, storage, and communication infrastructure can now be eliminated or repurposed for more profitable use. Power and cooling costs are reduced. You won’t have to worry about hardware disposal costs. IT staffing costs for hardware maintenance and management are also reduced. 

Looking At The Big Picture


Moving to a new loan origination software is a significant undertaking. However, the cloud, new CapEx and OpEx models, and flexible software pricing terms and licensing options can make the transition operationally and financially attractive. When looking at loan origination software pricing and licensing, adopt a long-term economic perspective. In addition to software, there are many other valuable capabilities, services, and programs offered by vendors that may be included in your licensing agreement and contribute to the overall success of your lending practice. Get everything you need and nothing you don’t.

Getting Started

defi SOLUTIONS is redefining loan origination with software solutions and services that enable lenders to automate, streamline, and deliver on their complete end-to-end lending lifecycle. Borrowers want a quick turnaround on their loan applications, and lenders want quick decisions that satisfy borrowers and hold up under scrutiny. With defi ORIGINATIONS, lenders can increase revenue and productivity through automation, configuration, and integrations and incorporate data and services that meet unique needs. For more information on the benefits of loan origination automation, contact our team today and learn how our cloud-based loan origination products can transform your business.

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