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The loans market in Canada is a billion dollar business, and lenders in this competitive industry need to be as cost-effective and efficient as possible in order to remain viable. But lending can be an administratively burdensome and intricate task, and for that reason a whole genre of companies have sprung into existence to help loan companies with their operational needs.
These companies are known as loan servicing and payment solutions companies, and can assist lenders in all manner of ways. In this article, we’re going to delve into the world of loan servicing and payment solutions, taking a close look at the various tools on offer, the functions they perform, and how much they cost. Let’s start with a list of some of the premier companies currently operating in Canada, shown in the table below.
Loan servicing is a term that encompasses a range of functionalities offered by third party companies in order to help lenders manage and administrate their lending business, over the full lifecycle of their loans - from origination to final reporting. This goes hand in hand with another important service available to lenders: payment solutions.
Although many loan servicing companies offer payment solutions as part of their packages, there are also dedicated payment solutions companies available to lenders, whose sole purpose is to facilitate seamless and effortless customer payments and reconciliation.
Both loan servicing solutions and payment solutions are available to lenders in every category of lending, from payday loans to mortgages, as well as for small Canadian lenders and big international lenders, and a variety of interest types. The breadth and flexibility of these services mean that almost any lender can realistically use them.
The various functions that loan servicing companies and payment solution providers can assist with include:
Almost all of these functions come as part of Software-as-a-Service (SaaS) solutions that lenders can purchase and either install or use on the cloud, ensuring maximally efficient in-house use. Some providers cater to specific types of lender (for example, mortgage lenders) while others are more general.
The advantages of loan servicing tools include:
However, most of these services come at a cost, usually either via a small fee on every loan payment made, known as the servicing fee, or via monthly or annual fees. As fee structures and prices can vary, it is incumbent on lenders to request a quote to fully understand what their expenses will be. It’s also important to know that there are some open source solutions available, for the cost-conscientious, but be aware that these lack the customer support aspects that paid solutions offer.
Now let’s take a look at some of of the leading providers in this space in Canada, across a range of specialties:
Specialty: Automated end-to-end solution for all lenders
TurnKey Lender boasts an increase in customer LTV of 10-25% when lenders use its services, which automate every aspect of the loans process across both traditional and alternative lending. It is one of the most comprehensive tools on the market and can be integrated with existing platforms, or used as a standalone. This international company is present in over 50 countries, has large banks, telecoms giants and digital lenders as its customer base, and has won awards for its innovative, AI-powered software solutions. Interested lenders can request a live demo to see TurnKey in action.
Specialty: Enterprise lenders
LoanPro is an API-based lending solution for the North American marketplace, and caters to mid-level and enterprise lenders. As it is hosted by AWS it is cloud-accessible and very scalable, making it useful for businesses that may need to ramp up or down quickly. Its services include payment solutions, data management, reporting, customer service and more. This is one of the rare examples of a full service loan servicing company that offers a free trial of its software for a whole month.
Specialty: Mortgage lending
Mortgage Automator is an end-to-end software solution for private mortgage lenders, including those in residential, commercial, and construction lending. It boasts some of the best client reviews in the market thanks to its advanced products, customizable solutions and reliable user training and support. Interested lenders can schedule a free one hour demo to see the software in action, but there is no free trial.
Specialty: Payment solutions
In the payment solutions market, Repay offers some of the most flexible options, tailored to specific industry needs. They have solutions for consumer finance, receivables management, healthcare, financial institutions and the automotive lending sectors. This is a US company operating in Canada, and it allows for web, mobile, text, telephone and in-person payment methods, as well as offering all of the back-end support to process and reconcile these payments.
Specialty: Financial institution lending
AutoPal is one of the best rated loan servicing solutions on the market, specifically designed for financial institutions. It services auto loans, title loans, consumer financing and more, and its functionalities are vast - ranging from complex real-time loan calculation and processing abilities, to in-depth auditing tools. There is literally no aspect of loan servicing or payment processing that AutoPal cannot handle. Interested lenders can sign up for a free trial of the cloud-based software.
Specialty: Loan amortization
LoanAssistant offers services on the bookkeeping side of the lending business, with its versatile loan amortization tool developed by accountants. This allows lenders of all stripes - including mortgage lenders, student loan holders, installment loan specialists and student lenders - to easily manage multiple loans and credit lines, and it is the only software solution of its kind that comes as an add-on with QuickBooks. A free trial is available.
Specialty: Affordable solution for small lenders
The Loan Office is one of the cheaper loan servicing providers on the market, ideal for smaller companies still looking for an all-in-one servicing solution. It comes with Office and QuickBooks integration options, and relies on its ease of use to be as useful as possible to as many people as possible. Useful functionalities include built-in document scanning and unlimited user-defined fields. As this is a relatively cheap solution, there is no free trial option for interested users.
Specialty: Document collection
Lending necessitates a slew of documentation, and FileInvite is one of the leading providers of document collection and collation. It allows lenders to send their customers a link to a dedicated, secure portal where they can upload specific requested documents by set deadlines. It is cost-effective, and a free trial is available.
Speciality: Accounts receivables
ezyCollect is a cloud-based debtor management solution for those concerned about managing the collections side of their business. With over 1,000 clients worldwide, it is a leader in this field, and automates reminders and other consumer communications, online payment processing, and more advanced debt collection procedures. A free trial of the software is available.
Specialty: Debt relief lenders
NuDebt’s software is an all-in-one solution for debt relief lenders, offering everything from marketing through to payment processing and legalities. It has a range of optional add-ons too, making it flexible to differing levels of need. Automated calculations and complex payment options mean it can help boost customer retention over the long term. It has no free trial available.
When it comes to making the difficult decision of which loan servicing or payments provider is best for your company, cost and functionality will certainly be the driving forces. But there are nuances that you must consider too, and these include:
Loan servicing companies all charge different fees, depending on the functionality they offer and other factors. Some are relatively cheap, starting at just $25 a month, while others charge thousands in annual or per user fees. To properly understand the cost of any given loan servicing company, you need to request a quote.
Loan servicing companies can help with every aspect of loan management, from origination to closing, including:
As each provider offers different levels of service, decide what you need help with before seeking a provider.
Yes, there so exist some open source software solutions that can help with your loan management, but it’s important to bear in mind that the reputability and reliability of these options can vary, so you should do your research before choosing a free provider. Some time-tested options include Apache Fineract, Trakker and HES Fintech. You can also get a free trial of some of the paid solutions.
Loan servicing software helps lenders with every aspect of their business, increasing revenues and efficiency, but they do so at a cost, and lenders must ensure that this cost is reasonable and affordable given their needs. There is also a risk that the chosen software might not integrate well with existing systems or be cumbersome to use, which is why researching your preferred platform before committing is so important.
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