Secured Lending

Overview

This example demonstrates timveroOS configuration for secured lending products where loans are backed by specific assets such as vehicles, real estate, or other valuable collateral. The configuration emphasizes automated collateral valuation, loan-to-value (LTV) controls, and comprehensive security documentation management.

Business Scenario

Target Market

Individual and business borrowers with valuable assets
Vehicle financing (auto, motorcycle, RV, boat)
Real estate secured loans (non-mortgage)
Equipment and machinery financing
Asset-based business lending

Product Parameters

Loan amounts: 80-95% of asset value
Terms: Aligned with asset useful life
Interest rates: Lower than unsecured due to collateral
Security: First lien position required

Risk Considerations

Accurate asset valuation critical
Depreciation and market value changes
Physical inspection requirements
Insurance and maintenance monitoring
Repossession and liquidation processes

Operational Requirements

Integrated valuation services
Title/lien verification
Insurance tracking
Periodic revaluations
Asset condition monitoring

Configuration Components

Credit Product Structure

Vehicle Financing Products:

Auto Loan - New Vehicles

Product Code: AUTO-NEW-001
LTV Maximum: 95%
Terms: 24-84 months
Eligible Collateral: Current and prior model year vehicles
Valuation Source: MSRP with incentive adjustments

Auto Loan - Used Vehicles

Product Code: AUTO-USED-001
LTV Maximum: 85%
Terms: 24-72 months
Eligible Collateral: Up to 10 years old, < 100,000 miles
Valuation Source: Market-based valuation services

Recreational Vehicle Loan

Product Code: RV-001
LTV Maximum: 80%
Terms: 60-180 months
Eligible Collateral: Motorhomes, travel trailers
Special Requirements: Storage verification, usage restrictions

Asset-Based Business Products:

Equipment Finance

Product Code: EQUIP-001
LTV Maximum: 80%
Terms: Match equipment life (24-84 months)
Eligible Collateral: Manufacturing, medical, technology equipment
Valuation: Invoice for new, appraisal for used

Accounts Receivable Financing

Product Code: AR-001
Advance Rate: 80% of eligible receivables
Terms: Revolving, 30-90 day receivables
Monitoring: Weekly aging reports required
Verification: Periodic audit requirements

Asset Entity Configuration

Vehicle Asset Attributes:

Core Attributes:
- VIN (Vehicle Identification Number)
- Make, Model, Year
- Mileage
- Condition (New/Used/Certified)
- Purchase Price
- Down Payment Amount

Valuation Attributes:
- MSRP (new vehicles)
- Market Value (used vehicles)
- Trade-in Value
- Auction Value
- Depreciation Schedule

Documentation:
- Title/Registration
- Insurance Policy
- Purchase Agreement
- Inspection Report (if required)

Equipment Asset Attributes:

Identification:
- Serial Number
- Manufacturer
- Model/Type
- Year Manufactured
- Condition

Valuation:
- Original Cost
- Current Market Value
- Replacement Cost
- Useful Life Remaining
- Depreciation Method

Location/Usage:
- Physical Location
- Primary Use
- Hours/Miles (if applicable)
- Maintenance Records

Collateral Valuation Workflow

Vehicle Valuation Process:

VIN Decode and Validation

Load Data Source: VIN Decoder Service
- Validate VIN format
- Extract vehicle specifications
- Verify manufacture year
- Check for recalls/issues

Market Valuation

Load Data Source: Market Check or Similar
- Retrieve retail value
- Get wholesale value
- Check regional adjustments
- Factor condition/mileage

LTV Calculation

Expression Node:
marketValue = getAdjustedMarketValue(baseValue, mileage, condition);
maxLoanAmount = marketValue * productLTV;
actualLTV = requestedAmount / marketValue;

Switch Node:
- If actualLTV > productLTV: Alert "LTV exceeds limit"
- If marketValue < minValue: Alert "Insufficient collateral value"
- If vehicleAge > maxAge: Alert "Vehicle too old"

Insurance Verification

Check Requirements:
- Comprehensive coverage
- Institution as loss payee
- Deductible limits
- Coverage amount >= loan amount

Complex Offer Script with Collateral

function calculateSecuredOffer() {
    const creditScore = profile.get("score");
    const income = profile.get("netMonthlyIncome");
    const assetValue = collateral.get("marketValue");
    const assetType = collateral.get("assetType");
    const assetAge = collateral.get("age");
    
    // Get product-specific LTV limits
    const ltvMatrix = getLTVMatrix(assetType, assetAge);
    const maxLTV = ltvMatrix[getCreditTier(creditScore)];
    
    // Calculate maximum based on LTV
    const maxByLTV = assetValue * maxLTV;
    
    // Calculate maximum based on payment capacity
    const maxPayment = income * 0.15; // 15% PTI for secured loans
    const rate = getSecuredRate(creditScore, assetType);
    const maxByPayment = calculateLoanAmount(maxPayment, rate, getMaxTerm(assetType));
    
    // Take lower of LTV or payment capacity
    const maxAmount = Math.min(maxByLTV, maxByPayment);
    
    // Apply product limits
    const finalMax = Math.min(maxAmount, productAdditive.getMaxAmount());
    
    if (finalMax >= productAdditive.getMinAmount()) {
        return {
            minAmount: productAdditive.getMinAmount(),
            maxAmount: finalMax,
            minTerm: productAdditive.getMinTerm(),
            maxTerm: getMaxTerm(assetType),
            rate: rate,
            requiredLTV: actualLoanAmount / assetValue,
            insuranceRequired: true,
            titleRequired: true
        };
    }
    
    return null;
}

function getLTVMatrix(assetType, age) {
    // Returns LTV limits by credit tier
    if (assetType === "VEHICLE_NEW") {
        return {
            "PRIME": 0.95,
            "NEAR_PRIME": 0.90,
            "SUBPRIME": 0.85
        };
    } else if (assetType === "VEHICLE_USED") {
        return {
            "PRIME": 0.85,
            "NEAR_PRIME": 0.80,
            "SUBPRIME": 0.75
        };
    }
    // Continue for other asset types...
}

Security Documentation

Title and Lien Management:

Title Perfection Process:

Verify clear title (no existing liens)
Prepare lien documentation
File with appropriate authority
Obtain lien confirmation
Store electronic copies

Required Security Documents:

Security agreement
UCC-1 financing statement (equipment)
Vehicle title with lien notation
Insurance assignment
Power of attorney (for title processing)

Document Templates with Asset Data:

Security Agreement Template:
This Security Agreement secures payment of the loan with:
{{collateral.year}} {{collateral.make}} {{collateral.model}}
VIN: {{collateral.vin}}
Current Value: {{collateral.marketValue | currency}}

Monitoring and Servicing

Insurance Monitoring Configuration:

Monthly insurance verification
Automatic lapse notifications
Force-placed insurance triggers
Premium tracking

Periodic Revaluation:

Annual value updates for long-term loans
Market value tracking for portfolio
LTV recalculation triggers
Collateral release conditions

Default Management:

Payment default workflows
Repossession authorization
Asset recovery partners
Liquidation procedures

Implementation Steps

Step 1: Asset Framework Setup

Define asset types (vehicle, equipment, etc.)
Configure asset attributes per type
Set up asset-participant relationships
Create asset document requirements

Step 2: Valuation Integration

Connect valuation services
Create VIN decoder mappings
Set up equipment appraisal process
Configure value adjustment rules

Step 3: Security Workflows

Design collateral evaluation workflow
Implement LTV calculations
Create insurance verification logic
Set up title perfection tracking

Step 4: Product Configuration

Create secured loan products
Define LTV matrices by product
Set term limits by asset type
Configure documentation by value

Step 5: Offer Engine Setup

Create LTV-based pricing scripts
Implement payment capacity checks
Configure insurance requirements
Test various scenarios

Step 6: Document Preparation

Create security agreement templates
Design lien documents
Set up title processing forms
Configure insurance notices

Step 7: Monitoring Systems

Set up insurance tracking
Configure value monitoring
Create default workflows
Establish recovery procedures

Step 8: Integration Testing

Test full loan origination
Verify lien perfection
Validate monitoring triggers
Test default scenarios

Technical Considerations

Data Management

Asset registry maintenance
Valuation history tracking
Lien position management
Insurance policy storage

Integration Requirements

Real-time valuation APIs
DMV/title office connections
Insurance verification services
Auction/remarketing platforms

Performance Optimization

Cache vehicle specifications
Batch insurance verifications
Queue title processing
Index by VIN/serial numbers

Compliance Features

Electronic lien capabilities
Regulatory filing automation
Repossession law compliance
Insurance regulation adherence

Advanced Configurations

Cross-Collateralization

Multiple assets per loan
Blanket liens on inventory
Cross-default provisions
Release mechanisms

Dynamic LTV Management

Market-based adjustments
Risk-based LTV tiers
Promotional LTV offers
Portfolio LTV optimization

Asset-Specific Features

Vehicle Loans:

Dealer integration
F&I product inclusion
GPS tracking capability
Extended warranty options

Equipment Finance:

Useful life calculations
Maintenance requirements
Upgrade/replacement options
Residual value tracking

Success Metrics

Portfolio Quality

Average LTV at origination
Collateral coverage ratio
Insurance compliance rate
Recovery rates on defaults

Operational Efficiency

Title perfection time
Valuation accuracy
Documentation completeness
Monitoring effectiveness

Risk Indicators

LTV migration trends
Collateral depreciation rates
Insurance lapse frequency
Recovery values vs estimates

Consumer Lending: Unsecured comparison
SME Lending: Business asset financing
Multi-Participant: Co-signer with collateral
Common Patterns: Collateral-based lending

Next Steps

Define acceptable collateral types
Establish LTV policies
Select valuation partners
Design recovery strategies

For additional support, consult your implementation team or system documentation.

PreviousSME Lending NextMulti-Participant

Last updated 4 days ago

Was this helpful?