Loan servicing software is a dedicated system that automates interest calculations, payment allocation, balance tracking, and reporting throughout the life of a loan. Unlike spreadsheets, where formulas vary by file and user, the software applies a single centralized calculation engine across all loans. For example, when a payment is received, unless otherwise instructed, the system automatically applies it according to predefined rules: fees first, then interest, then principal. With spreadsheets, those same calculations often depend on manual updates that introduce silent errors over time. Dedicated software ensures traceability, standardized logic, and reproducibility under audit or legal review.