Adding a repayment method while booking a loan

When you book a loan manually for a borrower, one of the most important decisions you make is how repayments will be collected. This is not a cosmetic setting. The repayment method you assign determines whether collections happen automatically on due dates or whether your team needs to chase the borrower manually every cycle.

Getting this right at the point of booking saves significant operational effort downstream. It also gives the borrower a clear, agreed repayment structure from day one.

This guide explains what repayment methods are, when to choose each one during manual loan booking, and how to configure them on the Lendsqr admin console.

What are the repayment methods in lending?

A repayment method is the channel through which a borrower’s loan installments reach the lender. In a traditional lending environment, borrowers physically walk in to make payments or transfer funds manually. Digital lending platforms like Lendsqr allow lenders to automate this process by linking a repayment method directly to the loan at the point of booking.

Lendsqr supports several repayment methods. These include direct debit mandates, debit cards, virtual accounts, and wallet-based collections. Each method works differently and suits different borrower profiles and lending products.

• Direct debit lets the platform pull repayments automatically from the borrower’s bank account on scheduled dates. The borrower sets up a mandate once, and collections run without manual intervention on each due date. This is the most reliable method for reducing missed payments. Read more in Payments with direct debit.

• Debit card collections charge the borrower’s saved card on repayment dates. This works well for borrowers who do not have a bank mandate but have a valid card on file. See Understanding debit card payments for loan repayment on Lendsqr for a full breakdown.

• Virtual account payments let borrowers transfer funds into a dedicated account number that Lendsqr generates for each borrower. The system tracks inflows and applies them to the loan. Read Payments with virtual accounts for more detail.

The repayment method you choose during manual booking sets the default collection channel for that loan. Without one, Lendsqr cannot automate collections, and your team must follow up manually for every repayment cycle.

Why the repayment method choice matters operationally

Consider a loan officer booking a loan for a market trader. The borrower has no smartphone and is unlikely to use a card regularly. Assigning a card-based repayment method for this borrower increases the chance of missed collections. A direct debit mandate tied to their bank account gives the lender a more reliable collection path.

Now consider a salaried borrower with a verified debit card. That borrower may not have set up a direct debit mandate yet. Assigning card-based collection during booking means repayments can start immediately without waiting for a mandate setup.

The right repayment method matches the borrower’s financial behavior and the product’s collection needs. A mismatch creates failed transactions, manual follow-ups, and borrower frustration.

For lenders with high loan volumes, failed collections also affect reconciliation. Each failed attempt creates an unresolved entry that your finance team must investigate. Assigning the most reliable available method from the start reduces this workload significantly. See Improve your loan repayments with these common-sense tactics for broader guidance on reducing repayment failures.

Before you begin

Before adding a repayment method during manual loan booking, confirm the following:

Your loan product must have at least one repayment method enabled in its product attributes. If the product has no repayment methods configured, the option will not appear during booking. Configure this first under the product settings before proceeding to the booking steps below.

The borrower must already exist on your platform, or you must create them first. See How to create a new customer before booking a loan request if the borrower is new.

Part 1: Configure the repayment method on your loan product

Lendsqr ties available repayment methods to the loan product itself. This means you set which methods are available at the product level first, before the loan officer sees them during booking.

• Log in to the Lendsqr admin console and navigate to Product Management in the side navigation panel.
• Click Loan Products and select the offline loan product you want to configure.

• Click on the Product Settings section of the product.

• Scroll to Repayment Methods and click Edit.

• Select your preferred repayment method or methods, then click Submit to save.

The product now offers those repayment methods during manual loan booking.

Part 2: Add the repayment method while booking the loan

Once the product has repayment methods configured, follow these steps when booking the loan for a borrower.

• Navigate to the manual loan booking flow. See How to manually book a loan for a customer for the full booking steps.
• On the loan booking form, enter the borrower’s details.

• Scroll to the repayment method section. Select the method that suits the borrower’s profile and the loan product.

• Click Book New Loan to complete the booking with the selected method applied.

Lendsqr assigns the selected repayment method to the loan immediately. From the first repayment date, the platform attempts to collect through that channel.

Choosing the right repayment method: practical guidance

Use direct debit for borrowers with active bank mandates and predictable account balances. This gives you the highest level of automation and the lowest risk of missed collections. It works best for salary earners, traders with regular turnover, and repeat borrowers with a good repayment history. See Creating a direct debit mandate for setup steps.

Use debit card for borrowers who have a valid card saved on their profile but have not set up a direct debit mandate. Card collections are fast to activate and work well for short-term or first-time borrowers. See Receiving payments with debit cards for more detail.

Use virtual account for borrowers who prefer to transfer funds themselves, or in contexts where automated debits are not feasible. Virtual account payments require the borrower to initiate the transfer, so they carry a higher risk of missed payments than automatic methods. Your team should set up reminders for borrowers on this method. See Receiving payments with virtual accounts.

If a borrower changes their repayment preference after disbursement, you can update the method from the loan management section. See How to modify a loan on the Lendsqr admin console.

What happens if a repayment collection fails

No repayment method is immune to failure. A card expires. A bank account runs low. A mandate gets deactivated. When collection fails, Lendsqr records the failed attempt in the transaction log. The loan balance does not reduce.

Your team should review failed collections promptly. You can trigger a manual repayment attempt or record a payment from another source. See Triggering manual loan repayment and Recording loan repayment from external sources for next steps.

For a borrower on direct debit, check whether the mandate is still active before retrying. See How to confirm the status of a mandate.

Learn more

To go deeper on repayment methods and manual loan booking workflows, read Introduction to manual loan booking for the broader context of how manual booking works on Lendsqr.

How to configure the repayment method instruction on your loan products covers how to display repayment method guidance to borrowers on your web app.

What repayment methods are available for lenders to get paid? on the Lendsqr blog gives a broader overview of collection methods and when to use each one.