Posted by MarkB_MI on July 28, 2012 at 03:06:37 from (66.87.2.58):
In Reply to: OT - I hate banks... posted by Lyndon - AB on July 27, 2012 at 12:06:11:
Looking at it from the bank's point of view, they have to weigh their odds. Your age is but one factor, but it's a big one because you haven't had time to build up a credit history.
Assuming they'll loan you money for a new pickup truck, it's because they have had good experience with borrowers with similar credit ratings who buy similar vehicles. They're assuming you'll keep your current job, which must pay pretty good. And if you default, they can repossess your vehicle and be able to sell it for pretty close to what you owe against it. They know exactly what the vehicle is worth because it's brand new (which is why loan rates are lower for new vehicles than used ones), so assuming you take care of the vehicle they have a good idea of its future value if you default.
Now take a look at the picture with the truck. Right off the bat it seems you're quitting your job and starting your own business. About half of new businesses fail in the first two years. So the probability you'll default is high, even if you have good credit. Any used vehicle is hard to put a value on, and used trucks are harder. Specialized vehicles are harder still, and logging trucks tend to get very rough service. So the bank is looking at a prospect where the probability is high that they'll be stuck trying to repossess and sell a vehicle that's worth a small fraction of the remaining loan principal. And I wouldn't be surprised if some of the bankers have had previous bad experiences with similar loans. It would only take one time where he had to retrieve a heavy-duty truck from a swamp, only to find the truck has a blown engine and bad transmission, to permanently sour a banker on loans to log haulers.
Next time a bank rejects you, ask the loan officer to explain what you need to do improve your future prospects. Your age is but one factor.
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