The Top Loan Software for Lenders

loan software for lenders

Your current lending software hasn’t been updated in years. With a heightened level of competition in today’s market, you realize that without the latest lending software capabilities you’re at a disadvantage. The burning questions:

  • What’s the top loan software for lenders today?
  • What technology, capability, and functionality will enable you to be competitive and profitable today?
  • Which will create a foundation for continued growth?

The answers will depend on your particular organization’s needs and goals, so you’ll want a core set of criteria on which to base your decision.

Top Loan Software for Lenders: Evaluation Criteria


Fintech advancements have significantly improved the ability for lenders to reduce loan processing costs and improve decision quality. As one of the Top 50 Most Promising Fintech Providers for 2018 by CIO Review Magazine, we’ve created a set of criteria to help you evaluate the top loan software for lenders. This information, along with the wealth of additional guidance on lending software in our Insight blog will prepare you well to make a decision regarding your next lending software platform.

Cloud-based Lending Software –
Don’t Lend Without It


Cloud technologies have radically transformed the way computing and communications services are developed, delivered, and consumed. The cloud reduces capital and operational expenses by eliminating the cost of server and storage hardware, as well as dedicated space and electricity to run hardware on your premises. Those responsibilities are assumed by cloud service providers like AWS, who manage computing infrastructure far more cost-effectively thanks to economies of scale.

Benefits of Cloud-based Lending Software


  • Faster implementation, frequent software updates, and rapid delivery of new functionality.
  • On-demand scalability that easily handles loan volumes during high-volume lending cycles.
  • Reliability and availability—cloud service providers guarantee at least 99.99% monthly uptime availability.
  • Ease of integration with other cloud-based services that complement and enhance lending process efficiency.

Read more: Your Loan Management Software Should Be Cloud-based. Here’s Why.

Mobile Support for Loan Initiation From Nearly Anywhere


A combination of changing demographics (primarily millennials), powerful mobile devices, and wireless network availability enables consumers to transact business from the palms of their hands. Loan software that supports mobile applications opens a new channel of lending opportunities. Lending software should offer easily-deployed mobile capabilities to capture buyers likely to initiate a loan application on the spot from nearly anywhere.

Configuration, Not Programming, to Meet Unique Lending Needs


Outdated loan software requires costly, time-consuming programming anytime a modification needs to be made to meet a lender’s unique business needs. That approach is no longer tolerable. A modern lending solution allows knowledgeable and authorized business users to use configuration menus to quickly (and securely) modify a wide range of software functionality. A few examples of the types of modifications that can be made using configuration include:

  • Customize the user interface to the needs of underwriting, funding, and servicing;
  • Define scorecard layouts and dynamically display information based on user and step in the loan origination workflow;
  • Easily integrate with 3rd-party data sources and services such as bureaus, alternative credit data, identity verification, vehicle valuation, and contracts;
  • Create decision rules to drive workflows, eliminate the variability of manual decisions, and ensure lending processes comply with current regulations; and
  • Develop custom formulas to consistently calculate ratios, rates, and terms.

Configurable loan software also maintains a record of who made modifications and when they were made. That provides an added level of confidence in the event of a compliance audit.

Read more: What Loan Management System Configuration Does For You

Integrate Easily With 3rd-Party Data Sources and Services


Innovative advances in fintech have significantly enhanced lender’s process efficiency and ability to make better-informed lending decisions. No single loan software vendor offers all the functionality that every lender needs. Software vendors with an exclusive focus on lending know what functionality needs to be in a core lending platform. They then integrate with specialized data sources and services that complement the core offering.

To obtain the greatest value from your investment in modern loan software look for integration with a wide range of specialized lending functions including:

  • Application sources such as CoreLane,  Dealertrack, and RouteOne to receive from dealers well-qualified applications that match your portfolio requirements;
  • Traditional credit bureaus—Experian, Equifax, and TransUnion. Note that each of these services provides consumer data in a different format. Services like Digital Matrix Systems can be employed to makes data inquiries to any of these data sources and deliver the information in a standardized, normalized format for easier processing and use in underwriting;
  • Alternative credit data—consumer information regarding employment, income, real estate, utility and rental payments is securely acquired, aggregated, and provided to give lenders a more detailed, current, and accurate picture of applicant financial strength;
  • Fraud identification and authentication and verification services—with the increasing incidence of auto theft initiated via fraudulent loan applications these services help eliminate these risks before they negatively impact your loan portfolio;
  • Vehicle valuation accurately calculates depreciation curves, loan-to-value ratios, historical values by model and segment, and residual modeling and analysis; and  
  • Digital document services eliminate paper from the lending process, accelerate loan processing, and securely retain a digital record of critical communications and documents.

The combination of a well-architected lending platform and integration with lending-specific data sources and services gives lenders all the tools needed to effectively compete in the current market.

Analytics for Process Improvement and Portfolio Management


Modern loan software allows you to capture and create significant volumes of applicant, process, borrower, and loan data throughout the lending process. These data contain a wealth of business insight when seen through the lens of integrated analytics. Lenders gain the ability to continually improve lending process efficiency, reduce risks, and improve portfolio performance.

A few specific examples show how integrated analytics can be applied throughout the lending cycle to reveals opportunities for improvement. Here’s a list of questions that analytics will help you answer for three specific areas of focus.

Process Efficiency

  • What is the average time between application arrival and time of first underwriting decision?
  • Which underwriters lag in productivity? What are the underlying reasons—training, experience, dealer source, credit tiers, stipulations?
  • Which steps in the underwriting process demand the most time? Can any of those steps be automated using decision rules or integration with 3rd party services?
  • What was the book ratio for the past quarter? How does it compare with the previous quarter? How does it compare year over year?
  • What percentage of auto-structured deals were booked in the past month?

Risk Reduction

Modern loan software allows you to capture and create significant volumes of applicant, process, borrower, and loan data throughout the lending process. These data contain a wealth of business insight when seen through the lens of integrated analytics. Lenders gain the ability to continually improve lending process efficiency, reduce risks, and improve portfolio performance.

A few specific examples show how integrated analytics can be applied throughout the lending cycle to reveals opportunities for improvement. Here’s a list of questions that analytics will help you answer for three specific areas of focus.

  • Which underwriters had an above average number of overrides on subprime loans in the past month?
  • What overall trends are you seeing in sources, dealers, vehicles, and credit tiers during the past 6 months?
  • Do any dealers or regions show an unusual number of fraudulent applications?
  • Do all loans to active military within the past month comply with federal interest rates?

Portfolio Performance

  • Do applications from certain dealers correlate with a high probability of default?
  • Are there any factors that strongly correlate with subprime defaults: loan, term, collateral, down payment, valuation, model, or another deal element?
  • What is the average exposure at the time of default for deals based on interest rate, loan, term, down payment, valuation, or model?
  • Can credit policies for any lending tiers be loosened without taking on added risk?

Integrated analytics capabilities should provide a very intuitive user interface for business users. This lets them select the data dimensions and measures they want to analyze and develop the reports that provide both summarized and detailed insights. Without integrated analytics and a regular review of process and portfolio performance, lenders won’t realize the full value and benefits of modern loan software.

Read more: Why Auto Loan Portfolio Analytics Are So Valuable

Making the Decision for New Loan Software


Moving to a new loan software is a major decision. However, the functionality and capability provided by modern loan software make this process far easier than what you may have experienced years ago.

Cloud enables rapid implementation and scalability to meet the most demanding lending cycles. Mobile opens a new channel of lending opportunity. Configuration allows you to transform “out of the box” software into a lending solution that meets your unique needs. Integration with data and services provides capabilities unavailable just a few years ago. Analytics put the power in your hands to continually improve lending efficiency and portfolio performance. In your evaluation of loan software for lenders, make sure your selection includes all of these capabilities.

defi SOLUTIONS loan software experts welcome the opportunity to discuss how the latest fintech capabilities improve process efficiency and portfolio performance. We invite you to discuss your specific needs and learn more about the benefits by contacting our team today or registering for a demo of defi LOS and defi ANALYTICS.

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