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| 1. |
Signature,
new and used auto loans will be underwritten using the current
Standard Application Process or through traditional underwriting by a loan officer, if the loan does not pass SAP. | |
| 2. |
If the loan is approved, it will be categorized into 1 of 5 categories (A, B, C, D or E).
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| 3. | The categories are determined by the Beacon Score (Equifax) on the member's credit report. |
| 4. | Score categories are as follows: A = 670-800;
B = 620-669; C = 576-619; D = 500-575; E = < 500 |
| 5. |
The pricing of the loan (the interest rate)
will be determined by the category that the loan falls into
based on the applicant’s risk score. If there is a
guarantor on the loan, the rate will be based on the primary
applicant’s risk score. |
| 6. |
Pricing is as follows: A = our “best/standard”
rate; B = Standard rate + 1.5%; C = Standard rate + 3%;
D = Standard + 5%.; E = Standard + 8%. |
| 7 |
Any loan that is rejected by a loan officer
that falls into a B category or above, based on the risk
score, will be reviewed by the Loan Committee for additional
approval opportunity or reconsideration. If the loan is
ultimately approved, it will be priced based on the structure
outlined above and the file will be documented as to the
reasons for approval. |
| 8 |
We will also disclose that the rate on the
loan will be based on the member’s creditworthiness.
|
| 9 |
We will use appropriate verbiage qualifying
the interest rates in our marketing and education materials. |
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| Adopted as part of loan policy: 18 May 2007 by Board of Directors. |
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| LNFCU Loan Policy: |
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The granting of loans is based on the ability
to repay the debt. The guidelines listed below will help
to protect the assets of your credit union. |
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| * |
Proof of income is required for all income
listed on the application. |
| * |
All loan requests are subject to credit checks.
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| * |
Undisclosed debts will be a cause for rejection. |
| * |
Your debt to income ratio should not exceed
35% (total monthly gross income X 35% equals maximum amount
of monthly payments.) |
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For a Signature loan the following
applies:
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| A. |
Maximum loan amount 20% of yearly gross
income, or $10,000, whichever is lower. Repayment terms
36 months. |
| B. |
Requests to refinance loans will be treated
as new loans, and should be for a minimum of $1,000 in new
funds. |
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For new and used auto loans the
following applies:
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| A. |
Must have dealer write up, or year, make,
model, and serial number. |
| B. |
Will not finance more than NADA guide book
for used autos. |
| c |
Loan and credit card rejections may be
appealed to the credit union review committee. Contact
the credit union manager to set up an appointment. |
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Policy updated: 18 May 2007 |
