You may have heard us talk about how Allied Business Systems satisfies lenders and borrowers alike through our robust, advanced lending software, absVision. But you may not know just what types of loans or financing solutions absVision can accommodate.
In this article, we’re diving into the loans and lending products that you likely offer and that absVision works for:
Direct Loans
A direct-to-consumer (DTC) loan, sometimes referred to as direct financing, allows lenders to serve their borrowers directly with beneficial lending options. Banks, credit unions, or private lenders and their borrowers bypass any middlemen, such as car dealers or retail stores, to provide borrowers with the funds they need.
Direct loans can either be secured or unsecured, and they can be originated and managed using absVision.
Examples of Direct-to-Consumer loans
Direct loans or direct financing provides borrowers with several financing options, including:
- Auto Loans
- Business Loans
- Educational Loans
- Personal Loans
And more!
Indirect Loans
An indirect loan, or indirect financing, describes a third-party relationship between the lender and the borrower. Boiled down to the basics, the borrower applies for a loan at a dealership, retail store, or other such merchant, which serves as the connection point between the borrower and the lender. Once the application is approved, the lender pays the dealer, and the borrower makes installment payments to the lender until the debt is paid off.
Indirect loans are typically secured by the item being purchased, and they can be originated and managed via absVision or originated outside of absVision and brought in for managing via an API.
Examples of Indirect Loans and Lending
Several types of merchants offer indirect lending services to their customers, including:
- Auto loans offered at car dealerships
- Installment loans offered at retail stores
Furniture stores, hardware stores, and really any store that carries big-purchase items are likely to offer their consumers financing capabilities through indirect lending options.
What Are the Main Differences Between Direct and Indirect Loans?
Direct and indirect loans are clearly different by definition, but there are several additional differences between the two.
About Direct Loans:
- The borrower and the lender have a direct relationship with one another.
- There is less risk for the lender.
- The lender has more control over the application and origination processes.
- Applying for a direct loan may require more steps from the borrower.
About Indirect Loans:
- There is a middleman, or an intermediary, facilitating the interactions between the borrower and the lender.
- There is more risk for the lender since the middleman is handling the transaction.
- The lender does not have as much control over the application since it is being handled by the middleman.
- The application process usually requires fewer steps, which is easier on the borrower.
Real Estate Lending
Real estate lending involves issuing loans to borrowers for the purpose of buying a house or land or for other purposes, borrowing against the value of a home that’s already owned. Real estate loans can be either direct or indirect, depending on the type of lender and the loans they offer:
- Retail lender: Retail lenders are typically banks or credit unions that can provide real estate loans or mortgages directly to borrowers. Once the loan is originated and closed, the retail lender will often sell the loan to investors in the secondary mortgage market.
- Portfolio lender: A portfolio lender is one that owns the loan from start to finish, originating it and managing it throughout the life of the loan.
No matter the type of real estate lender or the types of loans offered, absVision is robust enough to handle transactions, origination processes, and management processes until the loan is sold or officially paid in full.
Non-Traditional or Non-Conventional Loans
Certain loans or financing options don’t neatly fall into any of the categories we’ve mentioned before but are manageable with absVision. Two of these are medical financing and financing for business items like copiers.
Medical Lending
Medical lending, or medical financing, is a personal loan that is provided with the specific purpose of paying for a medical procedure or surgery. It can be direct or indirect depending on the lender:
- Direct medical loan – A borrower will apply directly with a financial institution or private lender for the loan.
- Indirect medical loan – A medical provider offers patients the opportunity to apply in-office or online for financing. They will facilitate the transactions between the borrower and the lending company they are using.
Business Equipment Financing
Business equipment financing can be used to purchase copiers, packing machines, furniture, computers, and more. Several options are available, including direct financing and indirect financing.
- Direct – The borrower applies for a business loan meant for an equipment purchase directly with a financial institution or a private lender.
- Indirect – The borrower applies for financing in-store to cover expensive equipment purchases.
No Matter What Kind of Loans Your Company Offers, absVision Is Your Automated Loan Origination Software Solution!
absVision is a robust LOS that is simple to use and fully automated. It improves the lending experience for your team and your borrowers, regardless of the types of loans you offer. From data entry and decisioning to loan management and closing, absVision ensures speed, convenience, accuracy, and so much more. Streamline your lending workflow and improve the experience for all involved when you choose absVision for your lending needs!
Learn about all the ways absVision can benefit you and your team by speaking with an ABS expert today: 800-727-7534
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