Octavio Perez E. N. Roussakis and Pablo Alvarez Mr Octavio Per has completed an application for a three-year penale 57,200.00 (see Exhibit to the application le indicated to the money would be depende various debts and to make a down payment on a 1987 Mandaca which he was to buy for more to and from werk Me Perived in the United States o years ago. He worked in New York, Chicago, and be before moving to Atlanta, Georgia. He has been in Atlanta for three months and is currentlying his brother's apartment. The works apo hearted working at Sky Airlines and plans to be apartment at the beginning of est month Mr Perez's application was handed over to Me Casa comer Iding office se me Mountain branch of Big Bank of Atlanta Alergoing over the loan application Med Me. Per a few details about his job, his new and the car he was going to the MEP excited about his new job, which provided a monthly income of $1.238.00 dood benefits He was optimistic about his fire with the company and felt that if he did a good job, had opportunity for advancement Me Perez's parent amounted to $350.00 per month and part of the would be well for the first month. last month, and one month depose front. Another portion of the 51.000.00) going to be used for a down payment on the car which was sing for $6,000.00 The Mandel would Sanice 55.000.00 for the years at 14 perc ingin mehly payments of approc5170.00 The remaining amount of the low was going to be wied to pay off the two companies and the $2,450.00 he owed the condition Meme went to say that is brother, and had mad account at the Big Bank for several years and feeded, he would offer his gute for the low Mr. Cash thanked Octavio for coming to Big Bank and red him that he would havewer form within four days Soon after Mr Pomelett Me Smiththe personnel director w Blue Sky Airline and is the bak to make a transaction Mr Cath took this opportunity to find out more about Me Pue How Me Smith only volunteered that Mr Perhad in factory hind confirmed the lypened by Mr Perez on the application With this information and Mi Cash proceeded to evaluate the low He thought appropriate to begin the walysis by listing the trengthend wees of de applicant and constructing a typical monthly budget of income and expenses to determine Me Pere's peable income the rate of 15 percent per month (18 percent per nom. This meant a monthly payment 5253. Me. Cash to figured out that Mr. Pere's average mothy food it was come to $150 his utility and cat expenses to about 5100 each Mr. Cha well www of the fututa coverage ratio of disposable income to an amount of 20 percent was a bank requirement for all personal Oceni 33 Another issue that Mr. Cash must consider is the wape of the loan-that is, whether the amount of the loan requested is sufficient to cover the proposed usage by the borrower Occasionally consumers make poor estimates of their actual credit needs. If these citimates are too high, the bank' risk exposure is increased if too low, bonower will need additional credit. Acredit estimate me be as accurate as possible for this is the basis of the loan. Hence, we see the importance of a loan age analysis Questions Should Mr. Cash recommend approval of Me Perez's loan? Explain your reasoning 2. Should the bank require that Mr. Perez's brother garantee the Why or why not? Exhibit 1 Loan Application LOAN APPUCATION Main Office- ranch Stone Mountain For a payment on a sarato paredett RUISES 77005. aldak Georgia P & Sunshine Atlanta Elan Hall .. 12 R Daniel Gone 1211 Aple Le 103 Rooney lo Tool 198 5.02 N Buddy Bres, 411 Saskine Si Tur MART 33- F 251 550 Fier 051-0004-0091 Korum NACE MALT Bad ALL ALL Roston Te Athly. (ITA) CORO NAME AGODUNT BLANC OR OUTSTANDING 1/89 Boston Gas and Electric New England Bell E ITA Credit 030-03030303 432908-7314 23.00 7/9 2.050.00 1175.00 CERTY THAT THE STATEMENTS CONTAINED IN ARTHUR AND THAT I AM NOT ABLE FOR ANY DET. THAN SRIGINALLY USED THEM AUTHORIZED TO OBTAIN ANY INFORMATION WORDEN GELAR FOR CORBERATION OF THE CONTROVEST AND DURING THE CREDIT TRANSACTION, APPROVED Gran ferea wher, 1997 OPEN IN... Octavio Perez E. N. Roussakis and Pablo Alvarez Mr Octavio Per has completed an application for a three-year penale 57,200.00 (see Exhibit to the application le indicated to the money would be depende various debts and to make a down payment on a 1987 Mandaca which he was to buy for more to and from werk Me Perived in the United States o years ago. He worked in New York, Chicago, and be before moving to Atlanta, Georgia. He has been in Atlanta for three months and is currentlying his brother's apartment. The works apo hearted working at Sky Airlines and plans to be apartment at the beginning of est month Mr Perez's application was handed over to Me Casa comer Iding office se me Mountain branch of Big Bank of Atlanta Alergoing over the loan application Med Me. Per a few details about his job, his new and the car he was going to the MEP excited about his new job, which provided a monthly income of $1.238.00 dood benefits He was optimistic about his fire with the company and felt that if he did a good job, had opportunity for advancement Me Perez's parent amounted to $350.00 per month and part of the would be well for the first month. last month, and one month depose front. Another portion of the 51.000.00) going to be used for a down payment on the car which was sing for $6,000.00 The Mandel would Sanice 55.000.00 for the years at 14 perc ingin mehly payments of approc5170.00 The remaining amount of the low was going to be wied to pay off the two companies and the $2,450.00 he owed the condition Meme went to say that is brother, and had mad account at the Big Bank for several years and feeded, he would offer his gute for the low Mr. Cash thanked Octavio for coming to Big Bank and red him that he would havewer form within four days Soon after Mr Pomelett Me Smiththe personnel director w Blue Sky Airline and is the bak to make a transaction Mr Cath took this opportunity to find out more about Me Pue How Me Smith only volunteered that Mr Perhad in factory hind confirmed the lypened by Mr Perez on the application With this information and Mi Cash proceeded to evaluate the low He thought appropriate to begin the walysis by listing the trengthend wees of de applicant and constructing a typical monthly budget of income and expenses to determine Me Pere's peable income the rate of 15 percent per month (18 percent per nom. This meant a monthly payment 5253. Me. Cash to figured out that Mr. Pere's average mothy food it was come to $150 his utility and cat expenses to about 5100 each Mr. Cha well www of the fututa coverage ratio of disposable income to an amount of 20 percent was a bank requirement for all personal Oceni 33 Another issue that Mr. Cash must consider is the wape of the loan-that is, whether the amount of the loan requested is sufficient to cover the proposed usage by the borrower Occasionally consumers make poor estimates of their actual credit needs. If these citimates are too high, the bank' risk exposure is increased if too low, bonower will need additional credit. Acredit estimate me be as accurate as possible for this is the basis of the loan. Hence, we see the importance of a loan age analysis Questions Should Mr. Cash recommend approval of Me Perez's loan? Explain your reasoning 2. Should the bank require that Mr. Perez's brother garantee the Why or why not? Exhibit 1 Loan Application LOAN APPUCATION Main Office- ranch Stone Mountain For a payment on a sarato paredett RUISES 77005. aldak Georgia P & Sunshine Atlanta Elan Hall .. 12 R Daniel Gone 1211 Aple Le 103 Rooney lo Tool 198 5.02 N Buddy Bres, 411 Saskine Si Tur MART 33- F 251 550 Fier 051-0004-0091 Korum NACE MALT Bad ALL ALL Roston Te Athly. (ITA) CORO NAME AGODUNT BLANC OR OUTSTANDING 1/89 Boston Gas and Electric New England Bell E ITA Credit 030-03030303 432908-7314 23.00 7/9 2.050.00 1175.00 CERTY THAT THE STATEMENTS CONTAINED IN ARTHUR AND THAT I AM NOT ABLE FOR ANY DET. THAN SRIGINALLY USED THEM AUTHORIZED TO OBTAIN ANY INFORMATION WORDEN GELAR FOR CORBERATION OF THE CONTROVEST AND DURING THE CREDIT TRANSACTION, APPROVED Gran ferea wher, 1997 OPEN IN