Personal loans are traditionally small, unsecured loans that are revolving or closed-end. The most common type of personal loan is the credit card. However, smaller banks offer small closed-end loans--those which have an expiration date and a standard monthly payment. For loan officers, these are often the easiest products to sell to a potential borrower. There isn't too much risk on either side of the table, but loan officers must be able to effectively close the deal.
Confirm the customer's eligibility. You do not want to waste your or their time with an offer for which the customer cannot qualify. Calculate the debt-to-income ratio (DIR) by dividing the sum of all monthly credit-reportable bills by their gross monthly income. A good DIR is below 40 percent. Look at the credit report and score, and make sure it meets your company's lending guidelines.
Listen attentively. The customer will tell you exactly why he is applying for a personal loan. The first mistake amateur brokers and loan officers will make is to try to sell cookie-cutter loan products to all consumers. Instead, try to tailor a personal loan package to the customer's wishes.
Present options. Do not assume that the customer will want one specific personal loan. Present different loan amounts with different corresponding payments and different loan types (closed-end, revolving). Fully explain the differences inherent in each program.
Ask which of the products will best suit her needs. Ask for a commitment. This is when salesmanship will come into play. Describe the features of your service and your company, not just the features of the loan. Many customers will respond to personalized service over competitive programs.
Respond to any objections with courtesy and empathy. You want to show that you understand his hesitation and that you'll work to overcome certain barriers, such as fees and rate. Speak with your manager or have a sit-down with all parties to iron out any hang-ups.
Set a closing once you've agreed to the terms. Before the closing, call or sit down with the customer and re-review all the final terms of the loan. This will make for a smooth closing and will help solidify trust in you as a loan officer.
Things You'll Need
Personal loan paperwork (offer, rate, payment, fees, features)
Consumer's credit report, income documents