About Credit Underwriting
Borrowers who qualify choose between a line of credit and a term loan, each with fees your institution sets. Loan and line of credit parameters are set in the Settings > Credit Underwriting section of the portal at the time of implementation with Autobooks.
How the products compare
| Line of credit | Term loan | |
|---|---|---|
| How it works | Revolving. The borrower draws, repays and draws again up to the limit | A fixed amount paid back in set monthly payments |
| Term | Set by your institution, for example 36 months. Can be on demand with no maturity | Chosen by the borrower from the terms you offer, for example up to 60 months |
| Payments | Set by your institution, for example 2% of the balance or $25, whichever is more. Interest only is an option | Fixed monthly payment based on amount, rate and term |
| Fees | Setup fee and an optional annual fee | Origination fee. No annual fee |
| Renewal | Can renew at maturity after a fresh review | Does not renew |
| Draws | Made through your online or mobile banking after your team books the line | Funded once at booking |
Example: a borrower qualifies for $20,000. They can open a $20,000 line of credit or take a term loan of up to $20,000 over one of the terms you offer. You can set a minimum loan amount for longer terms, for example $50,000 for 60 months.
Both products require a checking account at your institution, and the borrower must keep it open.
Note: A line of credit that will not renew can be converted to a term loan, at your financial institution's discretion.
Qualification criteria, loan availability and other loan terms
Your credit underwriting matrix is finalized during implementation with Autobooks. Only certain user roles at your financial institution are permitted to change the matrix.
Matrix details are found at Settings > Credit Underwriting.
Borrower fees
Lending fees are determined by and belong to your financial institution. Fees are assessed on your core and posted to your general ledger. Autobooks does not collect borrower fees on your behalf.
| Fee | Applies to | When it is charged |
|---|---|---|
| Setup fee | Line of credit | When the line is opened |
| Annual fee | Line of credit | Each year the line is open, whatever its term |
| Origination fee | Term loan | When the loan is made |
How fees are set
- Fees are part of your credit underwriting matrix and are set for each product at the time of implementation with Autobooks.
- You can use one flat fee or tiers by loan size.
- Fee amounts will populate onto the loan disclosures and loan documents the borrower signs.
To learn about converting a line, see Convert a line of credit to a term loan. To learn how the qualified amount is set, see About the Credit Matrix.