Truth in Lending
With the mortgage crisis still very much on our minds these days, I felt it was time to go over a few little things we could all do to make things easier.
So, the issue was banks giving mortgages to people who probably shouldn’t have them anyway. Then, they decided to start gambling on that bad debt. I’m a gambler too, but that was a bit much. In the wake of all this financial debauchery, the process of getting any loan, is now a nightmare of paper cuts and carpel tunnel.
Many years ago, you could walk into your local bank branch, tell them you wanted a car, and they’d say “Alright, we know you, and have an established history, go for it!”. Now, you’re submitted to a formal interrogation and an endless stack of paperwork and phone calls.
What about a mortgage? My parents are currently going through that mess and it’s even worse. “Ok, where did you get this money?” “From our other account…that is here…at your bank.”
With the technology we have at hand, we sure do need to answer alot of dumb questions. In addition, we fill out a few pounds worth of paperwork each time. So much for “going green”, eh?
Now, enter my issue. Debt to income ratio. I’ve got a good credit score, pay my bills on time, and have several accounts at my local bank. Unfortunately, since my wife stopped working, all loans and debt now gets attributed to me. I don’t mind much, I have strong shoulders. What I do mind is someone telling me they can’t work out numbers when I know that I can make them work. Instead, I say, we try some real truth in lending practices.
Step one, hook the customer up to a lie detector. Ask them if they’re sure they can really afford the debt. If they’re honest, and say “No, but neither can the Jones’ and I need to keep up”, I say loan approved! OK, maybe not the best plan.
Maybe there’s a middle ground, between a deal on a handshake and a deal signed in blood. A realistic look at one’s finances, their actual history of banking and payments, and just as in any business, there should be a gut feeling involved. “I feel like this guy can pay”.
Unfortunately the beaurocracy involved with loans, approvals and the like, is what keeps many good small businesses just that…small. The inability to gain acceptable financing or terms can be the demise of even the greatest ideas. Luckily, we’re coming to a point where more individuals and organizations can now enter the lending game.
Micro loans, crowd-funding and social lending are all new and exciting things on the horizon. They let people like you and me, decide if we believe in someone or something. Then we can fund them.
Now? The bank decides, and still uses my money to do it. Go figure.