Adding a repayment method is a critical step in the loan booking process, as it determines how loan repayments will be collected from the borrower. Without a repayment method, there’s no clear channel for recovering the loan, which can lead to defaults, inefficiencies, and disputes. It serves as the foundation for automating deductions, tracking repayments, and maintaining accountability for both the lender and the borrower.
By setting up a repayment method during the loan booking process, lenders can ensure timely and efficient payment tracking, reduce manual follow-ups, and enhance the borrower’s experience. Automated deductions through bank accounts, cards, or wallet systems not only minimize the risk of missed payments but also reduce the operational burden on the lending team. Borrowers benefit as well, repayments become seamless, reminders are automated, and they avoid the inconvenience of manually initiating payments. Learn more here.
For example, imagine a lender booking a loan for a customer who doesn’t have an active repayment method tied to their profile, say, no bank account or wallet mandate has been set. Without this, the loan cannot be scheduled for automatic deductions, meaning the lender would have to follow up manually for every repayment cycle.
This opens the door for delays, miscommunications, and increased default risk. However, by adding a valid bank mandate or card as a payment method during the booking process, repayments can be scheduled automatically on due dates, saving time and ensuring compliance with the agreed terms.
Whether it’s through a direct debit mandate or card setup, ensuring a method of settlement is in place is not just good practice, it’s essential for operational success and borrower trust.
How to add a repayment method
- Navigate the Products Management Section
- Click on Loan Products and select the offline loan product you would like to select a repayment method
- Click on the Product Attributes section
- Navigate to Repayment methods and click on “Edit”
- To edit, select your preferred repayment method and submit
- While manually booking a loan for a user that already exists on your organization, input the borrower’s details
- Select the repayment method and proceed to “Book New Loan”.
Also read: What repayment methods are available for lenders to get paid?