As a highly regarded advisor & consultant specializing in balance sheet lenders serving B2C markets, particularly credit-challenged consumers experiencing financial distress, I emphasize the significance of comprehensive Key Performance Indicators (KPIs) in lending operations.

Monitoring KPIs is indispensable to thoroughly understand your current standing, trend lines, and necessary strategic adjustments.

The data derived from these metrics offer a tangible and real-time measure of success, allowing you to enhance profitability and achieve other key objectives of your organization.

Here is an overview of these pivotal performance metrics:

1. Loan Origination Metrics: These metrics offer insights into the early stages of the lending process, such as application, initiation, underwriting, closing, and funding.

They provide a snapshot of the efficiency and effectiveness of your loan origination processes.

2. Loan Servicing Metrics: These indicators pertain to the ongoing administration of your loan portfolio, including payment processing, account maintenance, and escrow management.

Monitoring these can significantly improve the efficiency of your servicing operations and increase customer satisfaction.

3. Default Servicing Metrics: These metrics relate to loss mitigation, collections, foreclosure, and repossession.

Regularly evaluating these indicators can help you anticipate and manage loan defaults and minimize the financial impact.

4. Financial Performance Metrics: These metrics encapsulate the financial health of your lending operations, including profitability, liquidity, solvency, efficiency, and valuation.

Keeping a close eye on these can ensure your business’s overall financial viability and competitiveness.

As a lender serving credit-challenged consumers in sudden financial emergencies, these KPIs can help you better support your clients while maintaining your organization’s financial stability and growth.

Ensuring these metrics are thoroughly monitored and acted upon can position your business as a responsible and successful lending institution in this challenging market.

LET’S TAKE A DETAILED LOOK AT THE KPI: “COST PER FUNDED LOAN” (CPFL).

What:
Cost Per Funded Loan (CPFL) is a measure of the total costs associated with generating and servicing a loan divided by the total number of loans that are successfully funded.

Costs can include direct expenses such as underwriting, acquisition, servicing, capital, and overhead expenses.

Why:
CPFL is an important efficiency metric for lenders. It helps them understand the cost efficiency of their loan origination and servicing processes.

High CPFL may indicate inefficiencies, while low CPFL can signify a well-optimized lending operation.

How to Measure:
CPFL can be calculated by taking the total costs associated with the loan process (both direct and indirect) and dividing it by CLICK ME TO READ ONLINE