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Loan Officer vs Loan Processor: Which Is Better?

Loan Officer vs Loan Processor: Which Is Better?
Sulaiman Abdur-Rahman
Sulaiman Abdur-RahmanUpdated March 8, 2024
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
A loan officer and loan processor are essential financial services workers. Loan officers talk with consumers about loan products, and loan processors gather information from loan officers to process loan applications.Although loan officers may have training on fair lending laws, loan processors can conduct additional fact-checking to help ensure regulatory compliance. Below we provide more information about loan officers, loan processors, and underwriters.

What Are Personal Loan Officers?

A personal loan officer is a financial services professional who primarily engages in customer service and sales of personal loan products. Loan officers can meet with consumers and answer any questions they may have about personal loans.When attempting to make sales, personal loan officers can reach out to consumers directly. The loan officer could contact consumers by telephone, email, or any other means and ask consumers whether they would like to apply for a consumer lending product.Personal loan officers can collect information from an applicant and forward the contents to an underwriter or loan processor. Loan officers can also check an applicant’s credit report and credit score. This legwork can set the stage for whether a personal loan application is approved and the terms and conditions of approval.

What Are Personal Loan Processors?

A personal loan processor is a financial services professional who primarily reviews and processes personal loan applications. These lending professionals process loans by collecting necessary documents and information from loan officers and applicants.Personal loan processors may conduct a compliance audit to help ensure the financial institution makes fair and proper credit decisions. In addition to verifying information, personal loan processors may make physical and digital copies of all received documentation and maintain a database on all loan transactions.Loan processors play a key role in the loan origination process. They work closely with loan officers and underwriters to process loan applications, including unsecured personal loan lending products.

What Does a Personal Loan Processor Do?

Personal loan processors may have the following job duties:

Review Your Application

Personal loan processors may review your loan application to make sure you’ve provided all necessary information and documents to move the loan application forward. Loan processors can troubleshoot and request additional documentation if the application falls short of compliance standards.

Verify Your Information

Loan processors may verify your information to confirm your identity and income. The loan processor may contact your employer to verify any employment information you’ve provided. The loan processor may also verify your bank account information to confirm you have a U.S. depository account and the ability to repay the loan.Some common reasons to get a personal loan include covering home improvement expenses and emergency medical costs. Loan processors may attempt to verify your stated reason for requesting the personal loan.

Request Documents

The loan processor may request additional documentation from the applicant. Loan processors generally need certain information to process a loan application, including information on your gross monthly income. When comparing secured and unsecured loans, loan processors may demand additional information if the applicant is pledging collateral.A loan processor, for example, may request documents verifying your ownership of an asset if you’re pledging an asset as collateral for a secured personal loan. This can help loan processors perform their jobs in compliance with rules and regulations. 

Third-Party Reports

Personal loan processors may order third-party reports to analyze the applicant’s creditworthiness and character. The loan processor may order credit reports and credit references documenting the applicant’s credit history with specific lenders.The processor may also request a criminal background check, particularly if the applicant is requesting large personal loans.

Loan Officer vs Loan Processor vs Underwriter

Below is a table comparing loan officers vs. loan processors vs. underwriters:
Loan OfficerLoan ProcessorUnderwriter
Meets with loan applicantsCollects documents from loan officersAssesses an applicant’s credit history
Answers consumer questions regarding financial lending productsReviews documents and verifies applicant informationReviews an applicant’s debt-to-income ratio
Contacts consumers with potential loan offersConducts compliance audits and requests additional information as neededDetermines whether an applicant can afford to repay the loan
Forwards applicant information to underwriters or loan processorsDisburses loan money to approved borrowersEvaluates the risk of lending money to applicants

Is a Loan Officer or Loan Processor Responsible for Your Personal Loan Approval?

Loan officers and loan processors are generally not responsible for approving personal loan applications. The underwriter usually approves or denies your personal loan application depending on your level of risk, and lenders may automate the approval process using software.A loan officer collects applicant information and forwards that information to a loan processor. The loan processor reviews the application for compliance and may submit the application to an underwriter for final review.Lenders can use automated underwriting systems or human underwriters to determine whether to approve or deny a personal loan application. The loan processor may disburse your personal loan within one to five business days if the lender’s underwriting process gives the green light.

When Does a Personal Loan Processor or Officer Get Involved?

A personal loan officer may get involved in the initial sales process by contacting consumers with personal loan offers. The personal loan officer may further become involved if consumers have any questions about personal loans. The loan officer may collect information from the applicant and forward that information to the personal loan processor.The loan processor may get involved when it’s time to process a loan application. A personal loan processor may also get involved in the loan disbursement process if an applicant is approved for a personal loan.

What Happens During Personal Loan Processing?

Here’s an outline of what happens during personal loan processing:
  • The personal loan processor receives an application for processing.
  • The loan processor confirms whether the applicant submitted all necessary documentation.
  • The loan processor indexes all documentation in a secure database.
  • The loan processor verifies the applicant’s identity and income information.
  • The loan processor checks for collateral information if the personal loan is secured.
  • The loan processor may view the applicant’s credit report and credit score.
  • The loan processor submits the application to an underwriter for final review.
  • The loan processor disburses personal loan funds to approved borrowers.

Getting Approved for a Personal Loan

Getting approved for a personal loan requires consumers to go through an application process. The application process may involve personal loan officers, processors, and underwriters.Loan officers and loan processors can play an integral role, but underwriters or automated underwriting systems determine whether an application is approved or denied. Getting approved for a personal loan means you’ve satisfied a lender’s underwriting criteria to qualify for funding.You can get approved for a personal loan with good credit or bad credit. Lenders, however, may offer the best terms and conditions to borrowers with excellent credit scores.Recommended: Guide to Personal Loan Qualifications

The Takeaway

Many loan processors, loan officers, and other financial services professionals are required to undergo compliance training. Federal laws and regulations protect consumers from unfair or deceptive lending practices, and lenders must disclose finance charges in nearly all consumer credit transactions.You may compare personal loan interest rates with the Lantern by SoFi user-friendly interface. Just provide basic information about yourself and the loan you need, and Lantern can guide you in the process to apply for a personal loan with the lender of your choice.

Frequently Asked Questions

What is the difference between a loan processor and a loan officer?
What is the difference between a loan processor vs underwriter?
Do I need a personal loan processor?
Photo credit: iStock/Sezeryadigar

About the Author

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman

Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
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