The primary purpose of LoanGeek is to enable lenders to keep track and automate the process of loan payments.
Payments have a few key attributes:
- Amount - This is the amount that you want applied to the loan or down payment.
- Transaction Fee - Lenders have the option of including transaction fees to offset the expenses charged by merchant providers.
- Total Amount - The combined amount plus the transaction fee.
Types of Payments:
Some lenders qualify lenders by requesting a down payment as part of the loan creation process. To support this functionality, we provide the ability to generate down payments and associated payment forms. For full instructions on how to accomplish this, you can visit the Down Payments area of our documentation. Down Payments do not generate an journal entries to be associated with a loan.
Loan Payments are unique because they impact the balance of a loan. All loan payments are used to pay down any accrued interest, fee balances (transaction fees, service fees, etc), and the principal balance. There are two types of loan payments:
- Unscheduled - Some borrowers like to make early payments on their loans. Unscheduled payments enable this without triggering regular service fees or changing the next payment date.
- Scheduled - Scheduled payments are the same as unscheduled payments except they do two things: they trigger the creation of the periodic service fees AND they move the next payment date for a loan by one month.
As it pertains to payment processing, there are two loan payment types:
- Charged - Charged transactions generate charge attempts through the merchant provider you have connected to LoanGeek. As you'll notice, you can connect "fallback payment accounts". When our system attempts to charge a Payment on a loan we will process, in order, each payment account until one succeeds. If all fail, the payment will be marked as "Failed".
- Recorded - Lenders can side-step the merchant charging process and use LoanGeek for managing the loan accounting. In such circumstances, the Lender must login to the dashboard and record a payment but leave the "Charge borrower account" checkbox unchecked. This Payment will instantly be processed as a successful payment and all adjusting loan balance transactions will occur immediately.
So how do these payments get triggered? There are four ways that this occurs:
- Automated scheduled payments - The vast majority of loans in the LoanGeek system are automatically managed. This means that you should be able create the loan details and do nothing else. In other words, it's set it and forget it. Every month your borrower will see their associated payment accounts automatically charged.
- Down payments form - After you create a down payment, you will provided with a link that you can give to your borrowers. When they visit this page and enter their payment information they will be
- Borrower-triggered payments - Borrowers can log in to the dashboard and make payments. They can make two types of payments: (1) unscheduled, or (2) scheduled. All payments made by borrowers on the borrower payment page will result in their payment account being charged. If the loan is manually tracked, borrowers cannot make payments via the system but they can login to view the status of their loan.
- Lender-triggered payments - Lenders also have the ability to login to the dashboard and record payments. Lenders can generate payments that are both (a) unscheduled, or (b) scheduled as well as (a) charged or (b) recorded.
ACH Vs Credit Card Payments
One last important aspect of payments in LoanGeek is the type of charged payment. LoanGeek supports both ACH and Credit Card accounts. How we manage payment failure differs for each type of account though.
The primary difference is that Credit Card transactions are processed instantly, whereas ACH payments can take a few days to process. This difference in timing means that we currently do not support fallback ACH payments.
This is to ensure that the loan accounting system is reliable. We may change this in the future.