Loan officer has had a request by a loan applicant to have the loan payments charged to his credit card.

Anyone heard of doing this? Anyone doing this?

Thanks in advance.

Why would you want to? It's a sure sign that the customer is in financial trouble and is pyramiding debt.

Randy,

I am VERY aware of the potential risks associated with this type of request.

Thank you for your opinion.

I would be interested in hearing suggestions and/or experiences in dealing with this type of request (if any exist).

My goal is to gather information to give management in order to better evaluate this and other similar types of requests by applicants/customers.

Have a great day!

I've never heard of doing this, and it is a red flag of the customer having financial difficulty. If you do this a few times, and the customer takes the dive into Chapter 7, you've just donated a couple of loan payments to him.
On the other hand, maybe he intends to charge the loan payments, and pay the credit card balance right away so he can get whatever perks, (frequent flyer miles, etc.) that he can get by using the card. Really...No really...It could happen.

Thanks Bill,

Those were also my thoughts.

There's already enough risk out here without adding to it, even to give a customer some extra "mileage".

The other issue is who issued the credit card that would be used? If it's one of ours, then we potentially add insult to injury by making it more convenient for the customer to avoid late fees on the loan and then get behind on the credit card and leave us (in the case of our loan being unsecured) with a much bigger charge off (loan AND credit card).

Thanks for your thoughts.

The borrower probably has a credit card that earns rewards so he wants to build up his points.