Deal Pack Blog

Finance Company Software: Loan Servicing

posted on: May-28-2013
by: Deal Pack
category: Finance

As a finance company, you may be wondering how you can earn cash without having to deal with the risk of taking on the entire loan. One way to do this is to service the loan for an originator. Servicing a loan means taking on the task of collecting the payments for the dealer or another finance company. In turn, you receive a percentage of each payment as revenue. This is helpful because you do not take possession of the loan, so if it defaults, you do not have a loss. The originator still carries the burden of the loan.

 

Another way a finance company can increase cash flow without carrying the risk of the loan defaulting is to purchase payment streams or PIPs (Payment Interval Purchase). When you purchase payment streams, you are only buying a certain number of customer payments from the dealer at a discount. The number of payments you wish to purchase depends on your appetite for risk. If you want minimum risk, then you would only buy a small number of customer payments. The benefit of this is to see if the customer will be making their payments on time. If they don’t, then you do not have to buy anymore and you are in the clear. If they are making their payments, you can purchase more payment streams or the paper entirely. This is a helpful way to “test the waters” as they say.

 

These may seem like complicated processes but fortunately, Deal Pack has the capability to process both types of products. You simply choose which process you wish to accomplish, take the payments, and pay the originator. Just that simple; call our support team today at (800)-526-5832 and give your finance company the jumpstart that it needs.

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