Flint Stone is a 50 year old technician with a construction company. He has been working with the firm since he left high school at age eighteen. His salary is $10,000/month and his expenses average $4,200/month. He has two children, both attending secondary school. His wife Wilma, is a school teacher with an income of $9,500/month. They bought their house ten years ago with a mortgage from another bank. The mortgage payment is $3,500/month.

Wilma saves 30% of her income after tax for retirement and the children education. She has a small loan balance on her car which is scheduled for final loan payment in ten months. Flint has been transferred to another location further from his current job and approached your bank for a loan to purchase a used car. He has $50,000 in his savings account. Your bank generally ask for 30% down-payment for used vehicles. The car cost $200,000. This is the first time Flint is applying for a loan at your bank and no credit history is available at your bank.

State briefly, two ways you can obtain information about Mr. Stones character. (2 marks)

Identify two weaknesses and two strength about this credit proposal. (4 marks)

Will you recommend granting the credit with a smaller contribution from the borrower? Justify your recommendation. (4 marks)