Review the following customer situations andchoosethe lending product option which best meets the needs of the customer while minimizing the level of risk to the lending institution. Pleasenote that it is possible to use one or more of the lending product options in several of the customer situations.

LENDING PRODUCT OPTIONS

A. Overdraft Protection

B. Student Line of Credit

C. Fixed Repayment Loan with a 20 year amortization (2^ndmortgage)

D. Fixed repayment loan with a seven year amortization, bi-weekly payments and a variable interest rate

E. Personal Line of Credit

F. Home Owner Line of Credit

G. Interest Only Demand Loan

H. Fixed Repayment Loan with a seven year amortization, bi-weekly payments and a fixed interest rate

I. Everyday Bank Credit Card

SITUATIONS

1. Adam works in construction and has just purchased a new Dodge Ram pick-up truck for $42,000.He gets paid every 2 weeks and he would like his payments taken out of his account on the day he gets paid.The interest rates are expected to go up shortly and he would like to minimize his payments if possible.

2. Nicole runs a small computer repair company.She buys most of the parts she requires to fix her customer's computers on-line and rarely spends more than a few hundred dollars.Her customers always pay her when she returns their computers, which is usually within a few days of receiving the required parts.

Alex has a summer job working on a ship that transports supplies to towns and villages along the coast of Hudson's Bay.He receives a paycheque every week but often cannot find a bank to deposit it in for several weeks.He has several payments coming out of his account each month which total about $800 and he is concerned that he will not have the funds in his account to cover them.

For the past three years Jake has been saving his money so he can pay for his tuition at University.He is hoping to become an electrical engineer and he thinks he has enough saved for three out of the four years.He is not sure that he will be able to earn enough money in his summer breaks to pay for the last year of school which he expects to cost about $18,000 and he wants to make sure that he has a back-up plan before he begins.His parents have offered to help if needed but Jake does not want to burden them if he can help it.

Sarah just learned that her new ski-boat will be ready for pick up next week.This was a surprise as it was not due to be delivered for another month so Sarah is off to the bank to arrange financing.The boat will cost her $28,000 and she is hoping she can minimize her payments and arrange them to come out of her account every two weeks to match her payroll deposit.The interest rates are currently high however they are expected to drop in the next few months.

Stephen just received a call from his stock broker advising him about an investment opportunity that could double in value in a year.He would like to invest $50,000 however he is a bit short on funds so he is considering borrowing the money but hopes to minimize his payments so he can reduce the effect on his cash flow.He expects to sell the investment at the end of the year and repay the loan.

Kelly's Aunt recently passed away and left her a large sum of money which she will receive in about six months.Kelly makes a good income and is well off financially and doesn't really need the money so she is planning to give some of the money to her two children, some to charity and take a trip with the rest.Kelly's children are both thinking about buying a house in the next month so she would like borrow some money now to cover their down payments and then re-pay it when the inheritance comes through.

The company Viji worked for recently closed and she lost her high paying accounting position.She has acquired a new job however her income is substantially lower and she is having difficulty keeping up with all her credit payments which include a mortgage, car loan, a small line of credit and three credit cards which are currently at their limits.Her house is worth $420,000, her mortgage is $173,000 and the total of all her additional debt is $68,000 which she is hoping to consolidate into one lower monthly payment.

Hannah owns a home in Barrie worth $320,000 with a small mortgage on it ($50,000) and she has the opportunity to purchase the vacant lot beside her house for $85,000.If she owned the property she could build the lap pool she has always wanted and use the rest of the land for a vegetable garden. Both Hannah and her husband have high paying jobs and their combined TDSR is very low.Most of their money is tied up in RRSPs and their house so they require a loan to purchase the land.

Last summer Cheryl wrote a book about her solo journey to the North Pole by snow shoe.Several weeks ago she sold the movie rights for half a million dollars and she will receive her money in 2 months.Cheryl is planning to use some of the money to purchase a sailboat which she will sail around the world.She would like to pick the boat up next week and needs to borrow some money which she intends to repay when her cheque from the movie studio arrives.