As a banker or as a financial planner

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Q. Mary Coyle has applied to you, the assistant manager at her bank division for a 3-yr loan in which to purchase a car. She wants $18,000 loan at the current rate of 1percent (%) per month (12percent (%) per annum). She also her husband, Doyle, have four children, aged 6-13, with the youngest starting first grade in September. Doyle earns $43,000 a yr as an accountant for the Shiny Foil Company. He is working on his CPA designation also expects to pass those exams next yr. Mary wants a car so she can start working outside the home again, after being out of the labor force for 10 yrs. She can work as a commissioned salesperson for a small food processor; Meaty Broil, Inc. Mary has worked in the food industry before also feels she can be successful. Currently, salespeople make about $35,000-$40,000 annually, but must pay work expenses, such as automobile costs, themselves. The earnings don't come early on; but, after months of experience or yrs of building up a client list. Mary can't work full-time for a couple of yrs, since she wants to be at home when the kids aren't in school. So, she plans to work about 5 hours daily outside the house but do some of the paperwork also phone calling at home. Mary also Doyle owns their small home. It has monthly mortgage payments of $748. The mortgage will be paid off in 25 yrs. Property taxes amount to $1,200 annually. Their other car has two yrs of $275 monthly payments remaining. Doyle's take-home pay is $32,000. They have $10,000 in an IRA for Doyle also has $1,000 in savings for emergencies. In addition, Mary has $3,000 which she will utilize for a down payment on the car.

1. Illustrate what advice would you give Mary, either as a banker or as a financial planner?

2. Would you approve the loan application? Why or why not? Elucidate how you came to this conclusion.

Reference no: EM1314885

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