Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, May 8, 1995 TAG: 9505080024
SECTION: BUSINESS PAGE: A8 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
DATELINE: LENGTH: Long
Whatever the purpose, you face dealing with a bank to borrow money.
If the very thought makes you uneasy, you may take some comfort in the thought offered by Rick Lewis, manager of the Cave Spring branch of Crestar Bank.
Banks, Lewis said, are competing briskly for loan business. "Everybody is trying to make it as easy as possible."
The secret of obtaining a quick and easy response is a little advance organization, suggested Peggy Tyson, consumer banking executive in the Roanoke region for First Union National Bank of Virginia.
Tyson recommended working through a local branch, either showing up and asking for the loan officer or, better yet, calling ahead for an appointment.
The loan officer will ask about your employment situation and work history and your current income. Your income must be verified, Tyson said, through your most recent W-2 federal income tax form or some paycheck stubs.
Most of the time, she said, the loan officer will call your employer to verify the stability of your job and your income.
If you have a co-applicant or co-signer on the loan, Tyson said, the same information must be obtained from him or her.
Then the loan officer is going to talk about your debts, the total and the monthly payments.
You may have collateral to secure the loan, such as the car for an auto loan or a bank certificate of deposit. If not, you will be asked to fill out a financial statement.
The investigation will cover a call to the credit bureau to see how well you handle your bills, as well as a check with your bank to see how you deal with your accounts.
Generally, banks train their loan officers as counselors, meaning that although you might apply for a standard loan, for instance, the officer may recommend that you use any equity you might have in your home instead. The interest rate on home equity loans is usually more favorable to the borrower, Tyson noted, and the interest paid on the loan is tax-deductible.
The loan officer is the person who actually completes the application, entering the information on a computer terminal. If it's early in the day and all the information is readily available, Tyson said, an answer can be given by the end of the day or even during the interview. Nine times out of 10, she said, the decision and the money are available within 24 hours.
Tyson said the typical customer is seeking a loan for a car, debt consolidation or such personal items as jewelry or home furnishings. The amount of the average loan is $14,000 or $15,000.
The bank, she said, likes to see no more than a 40 percent ratio of debt to income for consumer loans.
Lewis of Crestar Bank said the typical range is $5,000 for personal items and up to $20,000 for a car loan.
Too many people come to the bank ill-prepared, Lewis said. They cannot tell the loan officer the amount they owe, to whom they owe the money and, sometimes, even the amount of their monthly payments. Some people are not even sure of their annual income and are unable to articulate their need for a loan and for how much.
This does not make a good impression on the bank, Lewis said. Indeed, "this may be a flag" that the applicant cannot handle money.
He suggested that people come to the bank with full information, including gross monthly or annual income and a complete tabulation of debts.
It's really helpful, he said, if you come with W-2 forms for the last two years or with several payroll stubs.
Anyone who has changed jobs recently, especially from one type of work to a different profession or occupation, must be sure to have full income and debt information. A change in jobs is a hurdle to overcome in getting a loan.
In the case of a car loan, Lewis suggested, the information can be taken over the telephone in five to 10 minutes without the need for a visit to the bank. The answer can be given in several hours, even in the same day if the application is received in the morning.
Some people come to the bank for pre-approval of a car loan before going auto shopping. Lewis said some people who intend to look at cars over a weekend have their loan approved no later than Friday, closing the transaction Monday.
Or you can bring the invoice from the dealer and the bank can calculate the transaction.
Lewis said that car dealers can also handle the loan with the customer stating a preference for a particular bank. People often select their own bank, where they are known and don't have to prove their financial history from scratch.
More people today are using the telephone to apply for all types of consumer loans, Lewis said. Crestar, for example, has a 24-hour, toll-free number for applying over the phone, and Lewis said the bulk of calls come in the early evening. Shift workers call all night, Lewis said.
Information given by phone, such as employment and credit history, can be verified by the bank by phone. Lewis said the applicant has to come to the bank only if documentation is required.
by CNB