Do you talk to your bankers?

Do you talk to your bankers?

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Written by Niloufar Abedi,
Author of Highway to Success and Better living in USA

How many banks do have your accounts with?

Do you know what type of loans they offer?

Why do you need your banks to succeed?

Banks provide you with the money you need to grow financially. To use the advantages these institution provide, you have to understand what they are, how they operate, and how you can use their services. Banks are private companies, and they have their own principals, their own rules and their own language. You have to become familiar with these standards so you can build a successful relationship with these companies. When you have the ability of communicating with your banks, you can adopt their power and use them for your financial growth.

Banks: What are they?

Banks are private companies that buy and sell money. Since money is a liquid asset, banking is a very high-risked business. For this reason, banks adhere to the most restrictive policies for lending their money out. Because if borrowers defaults on their loans, it is rather impossible for the bank to recover its assets. Therefore, it will fail.

Among the internal policies of the banks for loaning money, there are four policies that will categorize any loan. The type, the limit, the geographical area, and the quota.

The type divides the loans to two major part: Personal and Commercial. The commercial loans are usually extended in short-terms (0-5 years). The other two periods that a loan can be issued for is mid-range (5-15 years) and long-term (15-49 years).

The limit of loan usually describes the minimum and the maximum amount of money a bank lends on a single loan.

The geographical area creates a limitation of where the bank can issue its loans.

The quota indicates the amount of money the bank will lend out in each loan category.

If your loan request does not meet with these four policies, your loan will be refused regardless of your qualifications.

How do banks operate.

A banks major concern is to receive the money it lend out including the interest. To decrease the risk of default, bankers try to get to know their customers in a less risky situation. Almost all banks offer checking and saving accounts to their customer and provide them with as many services as possible. These accounts are considered liabilities for the bank, but they are good tools for your bank to use in order to evaluate you as a potential borrower. Your accounts also put the bank in a favorable position of advertising its different type of loans to you constantly.

The advertising for the loans your banks offer allows them to pick and choose qualified applicants. You should remember that being a customer of banks by having your checking and saving accounts with them does not qualify you to get a loan or get a loan with prime interest rate. That only occurs when you have a good credit history, or you have previously established a relationship with your bank as a borrower. You have the ability of bringing both of these elements under your control. (If you have bad credit history or no history at all, it will take you between six months to two years to correct the problem. One of the ways to do so is by taking secured loans on your saving accounts. These loans can help you to build a loan history with your banks and improve your credit rating at the same time.)

Banks use the six c's to evaluate a customer as a potential borrower. Using these c's will help you to increase your borrowing powers. The six c's are: Character, Capacity, Collateral, Conditions, Credit, Capital.

Character. The personal presentation you make. when you deal with your bankers, present a very professional attitude even after you develop a personal friendship with them. Lenders look for people who present themselves as trustworthy and reliable, and who appear to be willing and able to meet their financial obligations.

Capacity. An assessment of the person's present and anticipated earnings, balanced against existing debts.

Collateral. What is pledged as security for the loan-such as real estate, stocks, savings, a mortgage, etc.

Conditions. The regulatory and economic factors. Regulatory conditions involve the statutory requirements governing the individual lender, such as whether banks are lending in specific areas or are making particular types of loans. Economic conditions are obviously important since, when the regional or national economy is strong, loans are more likely to be made than when the economy is weak.

Credit. This is the credit report of the person who requests the loan.

Capital. This is the net worth of the person as it is presented in his/her financial portfolio.

Notice how strongly your personality will effect your borrowing abilities. Consider making a point of getting to know the loan officers of your banks and creating a good impression on them.

How to build a relationship with your bank.

When you go to the bank to open a checking or a savings account, the bank's requirements are basic. They check your identification, and you fill out a signature card. They check your record to see if another financial institution has closed an account of yours due to your failure to pay. If such a negative point does not exist, they will open you account. These accounts give you a very good opportunity to evaluate the bank and decide if it can be of any value to you. When you open your accounts in a bank, you have the opportunity of making secure loans against your saving account. Use this option to borrow money from your bank, and apply the borrowed money toward opening a new account in a new bank. Repeat this action as often as you can until you have at least ten different banks to deal with.

When you go to borrow your secured loans, have a professional attitude. Interview the loan officers. Ask them what type of loans they offer and the policies they have for each loan. Make them understand that you are considering to use them as a lending institute. Put the officer in a position to sale the bank and its services to you. See how many loan departments they have. This is important. There are times that one loan department in a bank can not offer you the loan you need, and another department can accommodate you. Decide on the authority of the officer you are dealing with. If the officer who will approve your loans is located in another branch, move your accounts to that branch. When you borrow a few secured loans from your banks and pay them off. Ask your loans officers for signature loans. When you have borrowed a few signature loans, you are considered a good risk by your bank.

Banks are your best financial partners. However, you are giving them your business. If they can not accommodate your needs, there is always another bank that will do so. It is important to remember that banks are private companies. They do merge and change their policies. They go through many different changes. If you build all your relationship with one bank, you are leaving your self vulnerable to these changes.

Niloufar Abedi is the author of Highway to Success. To learn more about this book or to contact Ms. Abedi, please visit her official site...


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