Providing borrowers with flexibility and control over their loan repayment is essential for building long-term customer relationships, and that is succinctly what the loan liquidation feature in Configure, a core banking software powered by Evolve Credit, does. The loan liquidation feature in Configure empowers borrowers to proactively manage their loan obligations while offering lenders streamlined processes for handling early loan settlements.

Research indicates that borrowers value flexibility and control over their loan repayment options. A study by the Financial Consumer Agency of Canada (FCAC) found that 75% of borrowers prefer to have the option to pay off their loans early. Full loan liquidation in Configure meets this demand by offering a straightforward and convenient way for lenders to cater to this growing demand, potentially increasing customer satisfaction and loyalty.

Moreover, the ability to liquidate loans can have significant financial benefits for borrowers. A report from the Consumer Financial Protection Bureau (CFPB) indicates that borrowers who pay off their loans early can save an average of 15% on total interest charges. This immensely benefits the borrower and can lead to improved repayment rates for lenders, creating a win-win scenario.

How Full Loan Liquidation Works:

Purpose: The full loan liquidation feature enables borrowers to pay off their loans by covering the current principal and interest, with subsequent repayments requiring only the principal amount. This flexibility can lead to substantial savings for borrowers and improved cash flow management for lenders.

For Borrowers:

• Once enabled by the lender, borrowers can opt to fully liquidate their loans through the borrower web app during repayment.
• By clicking “Liquidate Loan,” borrowers indicate their intention to pay the current month’s interest and principal and the principal for subsequent months.

For Lenders:

• Lenders can manually initiate loan liquidation if needed, providing additional service to borrowers.
• The process involves searching for the specific borrower, selecting “Liquidate Loan” from the action dropdown, and prompting the borrower to fill in the necessary details.
• Once completed, the loan is marked as fully paid and moved to the liquidated loan tab for record-keeping.

Notifications and Confirmation:

• Borrower Notifications: Borrowers receive confirmation upon successful loan liquidation and subsequent loan closure.
• Lender Alerts: Lenders are also notified of successful liquidation payments and the final loan closure.

Key Benefits of Full Loan Liquidation:

• Enhanced Borrower Control: Full loan liquidation allows borrowers to manage their loan repayment strategy according to their financial circumstances.
• Streamlined Repayment Process: This process simplifies the repayment process for borrowers and lenders by transitioning to interest-only payments after full liquidation.
• Improved Cash Flow Management: This option allows borrowers to optimize their cash flow by paying off the loan principal upfront and subsequently managing smaller, interest-only payments.
• Potential for Early-Payment Discounts: Lenders can consider offering incentives for early loan liquidation to encourage faster repayment and reduce interest income risk.

Important Considerations:

• System Enablement: For the feature to be accessible to borrowers, lenders must activate the Loan Liquidation option within the product settings.
• Sufficient Funds: Borrowers must have adequate funds in their wallet or card to cover the total liquidation amount for the process to be successful.
• Irreversibility: Once initiated, loan liquidation is irreversible.

The Impact of Full Loan Liquidation Feature

Implementing full loan liquidation options can have far-reaching benefits. A study by Deloitte found that financial institutions offering flexible repayment options, including early loan liquidation, saw a 22% increase in customer retention rates. Additionally, these institutions reported a 17% reduction in loan defaults, highlighting the positive impact on both customer satisfaction and financial stability.

At Evolve Credit, we’re committed to providing innovative solutions that drive the lending industry forward. The loan liquidation feature is just one example of how we’re working to create a more flexible, efficient, and customer-centric lending ecosystem.