Lending products (loans, rental) are based on two vectors — control over usage and control over collections.
That gives us four types of foundational lending products,
- T1: No Usage Control, No Collection Control - lending to friends and families, landlord lending
- T2: Usage Control but No Collection Control - loan disbursed directly to service provider, education loans
- T3: No Usage Control but has Collection Control - loan disbursed to the borrowers account because they wish to pay multiple service providers or non-registered providers. However collection services like escrow or ENACH can be used
- T4: Usage Control with Collection Control - loan disbursed to the service provider and ENACH like services setup for automated collections