Commercial Loan Officer Interview Questions & Answers
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Enhance your Commercial Loan Officer interview preparation with our set of 76 carefully chosen questions. Each question is designed to test and expand your Commercial Loan Officer expertise. Suitable for all experience levels, these questions will help you prepare thoroughly. Download the free PDF now to get all 76 questions and ensure you're well-prepared for your Commercial Loan Officer interview. This resource is perfect for in-depth preparation and boosting your confidence.

76 Commercial Loan Officer Questions and Answers:

Commercial Loan Officer Job Interview Questions Table of Contents:

Commercial Loan Officer Job Interview Questions and Answers
Commercial Loan Officer Job Interview Questions and Answers

1 :: Explain me what is ‘Availability Float’?

Availability Float is a time difference between deposits made, and the funds are actually available in the account. It is time to process a physical cheque into your account.

For example, you have $20,000 already in your account and a cheque of another $10,000 dollar is deposited in your account but your account will show balance of $20,000 instead of $30,000 till your $10,000 dollar cheque is cleared this processing time is known as availability float.

2 :: Explain what is ‘Bill Discount’?

‘Bill Discount’ is a settlement of the bill, where your electricity bill or gas bill is sold to a bank for early payment at less than the face value and the bank will recover the full amount of the bill from you before bill due date. For example, electricity bill for XYZ is $1000; the electricity bill company will sell the bill to the bank for 10% to 20% discount to the face value. Here, the bank will buy the electricity bill for $900 whose face value is $1000, now the bank will recover, full amount of bill from the customer i.e $1000. If the customer fails to pay the bill, the bank will put interest on the outstanding bill and ask the customer for the payment.

3 :: Explain what is adjustment credit?

Adjustment credit is a short-term loan made by the Federal Reserve Bank (U.S) to the commercial bank to maintain reserve requirements and support short term lending, when they are short of cash.

4 :: Explain me what is ‘Cheque Discount’?

Cheque discounting service is offered only by few banks. For instance, if you have a cheque of $3000 outstation and the cheque will take 7 seven days for clearance, then bank will offer you a service for early payment. The bank can make an early payment, but they will pay only for certain percentage of the actual amount, here they will pay you $2000 but they will charge interest on it and the remaining $1000 will be paid, once the outstation cheques get clear.

5 :: Explain me what do you mean by ‘foreign draft’?

Foreign draft is an alternative to foreign currency; it is generally used to send money to a foreign country. It can be purchased from the commercial banks, and they will charge according to their banks rules and norms. People opt for ‘foreign draft’ for sending money as this method of sending money is cheaper and safer. It also enables receiver to access the funds quicker than a cheque or cash transfer.

6 :: Explain me what are payroll cards?

Payroll cards are types of smart cards issued by banks to facilitate salary payments between employer and employees. Through payroll card, employer can load salary payments onto an employee’s smart card, and employee can withdraw the salary even though he/she doesn’t have an account in the bank.

7 :: Explain me how Would You Handle an Irate Customer?

During your time as a loan officer, there will be customers who become very upset with your decisions. For instance, if a gentleman is unable to get financing for a new home for his family, he may become irate; it will be your responsibility to take ownership of the situation. “In the event that I am dealing with an irate customer, I will take the time to listen to the complaint very carefully and provide empathetic statements. If I cannot provide the exact resolution the customer wants, I will offer other products and services as well as financial advice that may help to calm the situation” is along the lines of what your potential employer wants to hear.

8 :: Explain what ‘LIBOR’ stands for?

‘LIBOR’ stands for London Inter-Bank Offered Rate. As the name suggest, it is an average interest rate offered for U.S dollar or Euro dollar deposited between groups of London banks. It is an international interest rate that follows world economic condition and used as a base rate by banks to set interest rate. LIBOR comes in 8 maturities from overnight to 12 months and in 5 different currencies. Once in a day LIBOR announces its interest rate.

9 :: Explain me what is ‘Loan grading’?

The classification of loan based on various risks and parameters like repayment risk, borrower’s credit history etc. is known as ‘loan grading’. This system places loan on one to six categories, based on the stability and risk associated with the loan.

10 :: Explain me what's your ideal company?

A company that has clear communication from person to person, department to department from upper management all the way to the bottom line workers.

11 :: Please explain what do you mean by term ‘Loan Maturity’ and ‘Yield’?

The date on which the principal amount of a loan becomes due and payable is known as ‘Loan Maturity’. Yield is commonly referred as the dividend, interest or return the investor receives from a security like stock or bond, interest on fix deposit etc. For example, any investment for $10,000 at interest rate of 4.25%, will give you a yield of $425.

12 :: Do you know what is ‘balloon payment’?

The ‘balloon payment’ is the final lump sum payment that is due. When the entire loan payment is not amortized over the life of the loan, the remaining balance is due as the final repayment to the lender. Balloon payment can occur within an adjustable rate or fixed rate mortgage.

13 :: Explain me what do you mean by ‘cheque endorsing’?

‘Endorsing cheque’ ensures that the cheque get deposited into your account only. It minimizes the risk of theft. Normally, in endorsing cheque, the cashier will ask you to sign at the back of the cheque. The signature should match the payee.

14 :: Please explain are you willing to work overtime, nights, weekends?

Yes. This is my starting stage of my life and I can do all thing which would help the company towards growth. And weekends and all I may not like it if it regularly phenomenons because everybody wants to take a rest to recollect the energy to work further whether it is a machine or human.

15 :: Tell us what are the different types of Loans offered by Commercial Banks?

Start-Up Loans:
This type of Loan is offered to borrower to start their business and can be used to build a storefront, to acquire inventory or pay franchise fees to get a business rolling.

Line of Credit:
Lines of credit are another type of business loan provided by commercial banks. It is more like a security for your business; the bank allows the customer to withdraw the amount from readily available funds in an adverse time. Customer or Company can pay back over time and withdraw money again without going into the loan process.

Small Business Administration Loans:
It is a Federal Agency (U.S) that gives funding to small businesses and entrepreneurs. SBA (Small Business Administration) loans are made through banks, credit unions and other lenders who partners with SBA.

16 :: Tell us what is the difference between bank guarantee and letter of credit?

There is not much difference between bank guarantee and letter of credit as they both take the liability of payment. A bank guarantee contains more risk for a bank than a letter of credit as it is protecting both parties the purchaser and seller.

17 :: Tell us what is commercial bank?

Commercial bank is owned by the group of individuals or by a member of Federal Reserve System. The commercial bank offer services to individuals, they are primarily concerned with receiving deposits and lending to business. Such bank earns money by imposing interest on the loan borrowed by the borrower. The money that is deposited by the customer will be used by the bank to give business loan, auto loan, mortgages and home repair loans.

18 :: Tell me your Methods for Meeting Goals?

Loan officers are often held to strict goals in regard to the number of loans they close per month. Your potential employer will want you to provide some information about the way is in which you intend to meet these goals. For instance, you may be told that you will need to close 20 loans per month. “I work very hard to meet goals and I have developed several methods for doing so. I pre-screen applicants to determine whether or not they have the credit necessary for a loan. This allows me to focus my attention on only those clients who may ultimately be approved” is a great way to start an answer, but you should elaborate further on additional methods.

19 :: Please explain why is it important to work with the best realtors?

They will be selling properties if times slow down and generating more opportunities if a slack time occurs. Also, quality of leads could be better as well.

20 :: Explain what are the different ways you can operate your accounts?

You can operate your bank accounts in different ways like

a) Internet banking

b) Telephone or Mobile banking

c) Branch or Over the counter service

d) ATM ( Automated Teller Machine)

21 :: Please explain what is cashier’s cheque?

A cashier cheque issued by the bank on behalf of the customer and takes the guarantee for the payment. The payment is done from the bank’s own funds and signed by the cashier. The cashier cheque is issued when rapid settlement is necessary.

22 :: Tell me are you efficient and organized with paperwork?

I am very efficient and organized with paperwork. I like to keep papers and paperwork together through files and folders and which helps me insure that I maintain attention to detail without getting documents misplaced.

23 :: Explain are you applying for other jobs?

Since I have no other ongoing commitments as of current I still have pen doors for opportunities arising my way.

24 :: Tell me what opportunities does a financial downturn present to financiers?

In a market where the value of assets is falling, known as a bear market, traders might consider taking short positions, that is, borrowing assets they don't own, selling them, and buying them back to return them at a later date when their price has fallen.

Meanwhile, those working in asset management or M&A might consider, or advise clients to consider, snapping up undervalued assets.

25 :: Tell us what is debt-to-Income ratio?

The debt-to-income ratio is calculated by dividing a loan applicant’s total debt payment by his gross income.
Commercial Loan Officer Interview Questions and Answers
76 Commercial Loan Officer Interview Questions and Answers