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Steve Bang
Captus Press,
ISBN
978-1-55322-373-3
(2018)
Whether
you are planning to borrow and looking for the best lending options to meet
your needs, or you are a financial advisor who has clients that are planning to
borrow and asking for strategies that will help them navigate the complex world
of consumer credit, this is the resource for you. Planning to Borrow was
written to help you understand consumer lending practices as they exist in
Canada today and provides strategies for effectively using the wide range of
lending products available. If you
are learning to become a lending offer (like Craig, our lender-in-training at
Everyday Bank), the realistic cases found in each chapter give you the
opportunity to understand how a lending officer should review a customer’s loan
request to determine whether to approve it, while also learning what you can do
to help meet your customer’s borrowing needs. Throughout the book you will find
tips and recommendations designed to save money for borrowing customers while
improving their access to lending products. This
revised edition of Planning to Borrow was necessitated by the new
federal regulations related to mortgage financing, including a tiered approach
to mortgage default insurance and the introduction of the mortgage stress test.
The author also took the opportunity to enhance the content by adding new
topics, such as credit score, borrowing from an employer, letter of credit, and
by expanding discussion on areas like mortgage renewal and mortgage
pre-approval. If you
are like most Canadians, you will find yourself borrowing money at some point
in your life. The information provided in this book will help prepare you for
the journey you will take into the land of consumer credit when you are planning
to borrow. For all
Readers, this book is not only easy to understand and fun to read, it is also a
great resource: For instructors
teaching personal finance, consumer credit and lending, this is a great
textbook for your students: For practitioners
this book offers:
Dedication • Preface to the Revised Edition • Preface •
Acknowledgements Introduction
Chapter 1 Capacity to Pay Discussion Case:
Preston’s New Car Total Debt Service
Ratio (TDSR) What Payments Are
Included in the TDSR and Why What Payments Are
Not Included in the TDSR and Why Why a 40% Limit on
the TDSR? The Advisor’s Corner
Preston’s New Car —
Case Solution Practice Case Chapter 2 Credit History of the Borrower Discussion Case:
Courtney Wants to Consolidate What Is a Credit
Bureau Report? How Lending
Institutions Use Credit Bureau Reports Credit Bureau Report
Accuracy Credit Score. Additional Ways to
Investigate Credit History How Do You Mitigate
Poor Credit History? The Advisor’s Corner
Courtney Wants to
Consolidate — Case Solution Practice Case Chapter 3 Character of the Borrower and Market Conditions Discussion Case: Our
Customer’s Son Dustin Character Employment • Living
Arrangements • Education • Marital Status • Ability to Manage Money • Honesty Market Conditions Stability
of the Economy • Stability of the Industry/Company • Impact of Inflation • The
Value of the Canadian Dollar • Government Policy • Potential Interest Rate
Fluctuations • The Advisor’s Corner Our Customer’s Son
Dustin — Case Solution Practice Case Chapter 4 Capital Worth of the Borrower Discussion Case:
Lily and Eric’s Cottage by the Lake How Do We Determine
Capital Net Worth? How Does Equity
Reduce Risk? What Does Capital
Worth Tell Us about a Customer? The Advisor’s Corner Lily and Eric’s
Cottage by the Lake — Case Solution Practice Case Chapter 5 Collateral Available to Secure the Loan Discussion Case:
Mark and Bailey Buy a Farm Safe Loans versus
Sound Loans Options Available
for Securing a Loan • Personal Guarantee and the Promissory Note • Cash and
Cash Equivalents • Principal Residence • Other Real Estate • Stocks, Bonds, and
Mutual Funds • Motorized and Recreational Vehicle • Stocks in Private Companies
• Personal Items • Co-signor • Equity Lending The Advisor’s Corner Mark and Bailey Buy
a Farm — Case Solution Practice Case Chapter 6 Mortgages Discussion Case:
Ramon and Jada Buy Their First House What Is a Mortgage? Gross Debt Service
Ratio (GDSR) [1]
Expenses Included in the Gross Debt Service Ratio Mortgage Default
Insurance The Mortgage Stress
Test Mortgage Payment
Options Payment Frequency
Makes a Difference Mortgage Payments
and Property Tax Mortgage Interest
Rates • Fixed Rate versus Variable Rate Mortgages • Length of the Term of the
Mortgage • Open versus Closed Mortgages Mortgage Special
Features Prepayment Options •
Deferred Payment Option • Portability Option • Assumability • Mortgage
Cash-Back Offers • The Mortgage Cash Account Homeowner Mortgage /
Line of Credit Buying a Newly
Constructed Home (New Construction Financing) • Builder Financing • Progress
Draw Mortgage Mortgage Penalties •
Three-Month Interest Penalty • Rate Differential Penalty The Mortgage Renewal
Process The Home Purchase
Process • Mortgage Pre-approval • Offers and Condition • Appraisals • Home Inspections
• The Role of Your Real Estate Agent • The Role of Your Lawyer • Title
Insurance • The Closing Process The Advisor’s Corner Ramon and Jada Buy
Their First House — Case Solution Practice Case Chapter 7 Other Lending Product Options Discussion Case:
Selecting the Appropriate Loan Product How Lending
Institutions Make a Profit Lending Money How Interest Rates
Are Determined in Canada Fixed Repayment
Loans • Amortization • Interest Rates on Fixed Repayment Loans • Repayment and
Penalties • Fixed Repayment Loan Renewals Revolving Loans Common Types of
Revolving Loans and Their Uses • Overdraft Protection • Credit Cards • Line of
Credit • The Revolving Loan Renewal Process Interest-Only Demand
Loans • Examples of Interest-Only Demand Loans • The Demand Loan Renewal
Process The Advisor’s Corner Selecting the
Appropriate Loan Product — Exercise Solution Practice Exercise Chapter 8 Loan Structuring Discussion Case:
Marjorie and Doug Need a Car The “Art” of Credit
Portfolio Structuring Lending to High–Net
Worth and Complicated Customers The Advisor’s Corner Marjorie and Doug
Need a Car — Case Solution Practice Case Chapter 9 The Lending Process: From Beginning to End Discussion Case: A
Day with Corrie: Learning the Ropes of Lending A Summary of the
Lending Process 1. Taking
a Loan Application 2. Investigation
and Verification 3. Approving
the Loan 4. Relaying
the Final Decision to the Customer 5. Preparing
the Documentation 6. Closing
the Loan with the Customer 7. Advancing
the Funds 8. Registering
the Collateral The Advisor’s Corner Practice Exercise Chapter 10 Lending Institution Options Discussion Case: Why
Companies Offer Loans Chartered Banks and
Trust Companies • How Do Banks Profit by Lending Money? • Why Borrow from
Banks? • Banks Are Conservative Lenders! Credit Unions • Advantages
of Borrowing from Credit Unions • Disadvantages of Borrowing from Credit Unions Insurance Companies
• Advantages of Borrowing from Insurance Companies • Disadvantages of Borrowing
from Insurance Companies Investment Companies
• Advantages of Borrowing from Investment Companies • Disadvantages of
Borrowing from Investment Companies Credit Card
Companies • Advantages and Disadvantages of Borrowing with Credit Cards Finance Companies • Advantages
of Borrowing from Finance Companies • Disadvantages of Borrowing from Finance
Companies Private Money
Lenders and Equity Lenders • Advantages of Borrowing from Private Money Lenders
• Disadvantages of Borrowing from Private Money Lenders Payday Loan
Companies • Advantages of Borrowing from Payday Loan Companies • Disadvantages
of Borrowing from Payday Loan Companies Pawnbrokers •
Advantages of Borrowing from a Pawnbroker • Disadvantages of Borrowing from a
Pawnbroker The Advisor’s Corner Practice Case Chapter 11 Unique Loan-Related Products and Lending Solutions Discussion Case: Amy
Is Getting a New Car Leasing a Car versus
Buying a Car • The Car Leasing Process • Advantages of Leasing • Disadvantages
of Leasing Dealer Financing
versus Borrowing from a Lending Institution • How Dealer Financing Works • Advantages
of Dealer Financing • Disadvantages of Dealer Financing Tax Advantages of
Borrowing • Borrowing to Invest in Stocks, Bonds, and Mutual Funds • Borrowing
to Purchase Rental Property • Borrowing to Invest in a Business Using Margin
Accounts to Purchase Stocks and Bonds Government-Funded
Student Loans Letter of Credit Borrowing from Your
Employer The All-in-One
Account Using Equity to Fund
Retirement (Reverse Mortgages) • What Is a Reverse Mortgage? • The Reverse
Mortgage Market in Canada • The Pros and Cons of Reverse Mortgages Credit Insurance • Credit
Insurance Options • Credit Insurance as a Condition of Approval for the Debt • Purchasing
Insurance from Lending Institutions versus Insurance Companies The Advisor’s Corner Amy Is Getting a New
Car — Response Practice Case Chapter 12 Small Business Lending to Self-Employed
Individuals Discussion Case: A
Big Contract for Chris Company Structure • Sole
Proprietor • Partnership • Incorporated Company Lending to Existing
Small Businesses • Verifying the Income Generated by a Small Business • Determining
a Company’s Debt Servicing Ability • Investigating a Company’s Credit History Lending to a New
Business Common Business Loan
Collateral Requirements • Chattel Mortgage • General Security Agreement • Guarantee
• Independent Legal Advice Common Business Loan
Product Options • Operating Line of Credit • Demand Loan • Commercial Mortgage The Advisor’s Corner A Big Contract for
Chris — Case Solution Practice Case Chapter 13 Recovering the Borrowed Funds Discussion Case: The
Case of the Missing Sailboat Why Do Borrowing
Customers Fail to Repay the Loan? Common Terms Used in
the Collection Process The Collection
Process 1. Contacting
the Borrower 2. Possible
Recovery Options 3. Realizing
on the Security (Collateral) 4. What
Happens When There Is Insufficient Collateral? Planning for
Avoiding Collection Problems The Advisor’s Corner The Case of the
Missing Sailboat — Case Solution Practice Case Glossary of Terms Common Acronyms Used by Lending Institutions About the Author
Multiple choice questions, a test bank and PowerPoint slides are available for instructors.
For the first 29 years of his working life, Steve was employed by a major Canadian chartered bank, and much of that time was spent assisting personal and commercial customers with their lending requirements. Most of the information found in the book stems from Steve's experience in the field of lending, which explains why there is an absence of citations in the book. During his time at the bank, Steve obtained his Certified Financial Planner designation, and he was recently awarded the Fellows of the Financial Planner Standards Council. Steve is currently Professor of Business at Humber College in Toronto, where he teaches financial planning, professional selling, and consumer credit. In 2016, Steve was selected by his college as a 2016 John & Suanne Roueche Excellence Awards recipient. The award is given by the League for Innovation in the Community College, a consortium of nearly 500 community colleges and technical schools worldwide, in recognition for outstanding contributions to teaching, leadership, and learning.
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