Tag: Loan Renewals

Renewed Loans Can Earn You More Income Than New Origination

Loan Renewals Are Often More Profitable Than New Originations

Many banks wait until the last possible period before renewing a loan. Waiting often invites competition, as other banks with loans out to that customer know exactly when other bank’s loans mature (hopefully you are capturing this information as well). To beat this problem, banks are smart to lock in renewals in advanced in order to minimize competition. Not only is a renewing loan likely a better credit risk (you have a payment history for starters), but banks can garner a larger spread making the risk-adjusted return more profitable. 

 

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