Case study 1 - Andrew and Stephanie Wilson
Background
Andrew and Stephanie Wilson are a young couple about to buy their first home. They have been married for five years and during that time have rented an apartment while saving for their own home.
They have been looking at properties for the last month and one has really caught their eye, although the kitchen and bathroom could do with a little work. They had planned on shopping around the various lenders themselves to find the most appropriate loan for their needs, but as they both work, they have little time to do the research necessary. And, as they both admit, they have limited knowledge of the loan products available and might have difficulty in evaluating the options.
They have not paid a deposit at this stage.
On a suggestion from Stephanie's father (one of your former clients) they have contacted you about the loan.
Task 1
Outline in detail the steps a Lender should take in order to document, settle and administer this application, post-approval.
Case study 2 - Natalie
Natalie is a single parent. She is returning to the workforce after a period looking after her young child. Because of the location of her new employment, she needs to buy a car for transport.
In the past, Natalie's former partner managed all the household finances, now she has to make the decision about how to finance the purchase of the car. She has insufficient funds to buy it outright.
Natalie comes to you for advice on credit and the best way to finance the purchase of the car. It is likely to cost about $15,000. She would prefer to obtain finance for the whole amount. Assume that her income will be sufficient to cover the repayments.
Task 2 - Explaining financial options
a). Provide a simple explanation of the difference between a secured loan and unsecured loan to Natalie for the purpose of her loan.
b). Explain the implications of taking out a secured loan.
Task 3 - Impact of credit history
Natalie tells you that her former partner failed to properly meet their unsecured personal loan debt obligations before they separated. Although Natalie eventually repaid the debt she is afraid that this incident may count against her when she applies for a loan.
What would you advise Natalie about:
a). The records kept by credit reporting agencies (please include at least two major credit agencies)?
b). the procedure and cost involved in obtaining a copy of her credit file?
c). The accuracy of records?
d). The impact of credit history including the legal obligations of Lenders? and
e). Her rights?