The customer also wishes to borrow 90% of the purchase price of the new vehicle. In looking at the full picture the loan officer recognizes that the customer's late payments were the result not of choice but of extenuating circumstance. In explaining the turndown of the loan application the officer cites the collateral issue as well as the late payments as reasons for not extending the loan. He points out to the customer though that in six months with no late payments on outstanding debt, and a larger down payment (capital) that the loan could be made. The moral risk of default is low and the loan officer recognizes this fact. The obverse scenario is the customer looking to borrow $40,000 on a new Cadillac Escalade. The credit report indicates a similar 615 score however, there are considerable differences to the application. Borrower B. is ready to put 30% down on the car requiring only a 70% loan to value. Additionally, the borrower has a low debt to income ratio (a measure of solid capacity), and has additional collateral which he could use to secure the loan. Upon closer inspection though the loan officer notices a disturbing pattern; over the last decade the borrower has had two cars repossessed because of late payments, with the only explanation that the car was worth less than the loan and he no longer wanted to make the payments. There are also several repeated late payments on credit cards, and again the explanation that he simply did not...
In this context the loan officer's decision is relatively easy to understand. Borrowers who can demonstrate a character of repayment and trust will be given greater consideration than those who may have greater collateral and capacity, but lack sufficient character requisite for loan approval. The Five C's of Credit will always be the standard process of a loan officer's decision to extend credit. The character of the individual however, as portrayed in their credit history plays a significant, if not the most important factor in the decision to extend credit.
Business Financing: Increasing One's Chances of Obtaining a Bank Loan Applying for a loan in a bank or any financial institution with lending capabilities can be frustrating, especially if the applicant does not know exactly what they are supposed to do to win the loan officer's confidence. Banks have an obligation to protect the funds and assets that clients have entrusted to them; as such, they often are very conservative. At
While it was generally agreed that the increase in prices was due mainly to an insufficient offer as the stock house was limited, opinions have also been forwarded according to which the buy-to-let purchases have contributed to the inflation of the house prices (Property Mark). The debate concerning the reasons for the massive price increases for residential properties (materialized mostly between 1996 and 2005) is however still ongoing. On the
1. As the consultant, create an argument that you will present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company’s success and stability over the next five (5) years. Provide support for your argument. As a consultant to the Chief Executive Officer (CEO) of Durango Manufacturing Company, I have established that the firm has a weakened pecking order in terms of accounting
Video Tape and Disc Rental Rentals Catalog/Mail Order Retailing Health and Personal Care Stores Retailing Table 2: Comparisons of Most Risky Small Business (BizStats.com, cited by Telberg, 2003) An Engine of Economic Growth More and more, Craig, Jackson and Thomson (2007) argue, policymakers perceive the small business sector "as a potential engine of economic growth. Policies to promote small businesses include tax relief, direct subsidies, and indirect subsidies through government lending programs." These authors stress that encouraging lending
Mortgage Communications Director Colleagues: We have before us both a significant challenge and a tremendous opportunity. The first few weeks of a new operation can establish the course that the company will follow for years to come and so I'm very excited to have been hired as the new Director of Communications for this group of mortgage professionals who are taking over this mortgage group. We have a number of key issues
Mortgage Fraud If a rash of armed bank robberies swept across America next year, and if in these robberies criminals absconded with $30 billion dollars, one may be certain that a public panic would ensue. The banking system would likely be changed forever. If thousands of armed thugs went rampaging across the nation forcing people out of their homes, into the streets, and then destroying the properties, leaving the occupants homeless
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