Lender wants me to switch to their bank to get a loan. What happens if I don’t like it and stop using with out telling them? Have you done this?
Online retailer here I have hunch a hunch this small banks website is going to be trash. Wondering what would happen if I stopped using their account? Can they take back the loan or something worse?
[{"id": "ibr9qnf", "text": "Unless they include something in your loan documents that requires you to use their bank, you don't have to", "replies": [{"id": "ibrbws7", "text": "Verbally they said we have to. Let\u2019s assume that would be in there", "replies": [{"id": "ibrjkqu", "text": "Some banks have an interest rate adjustment if the deposit account is not maintained. In my experience, usually not enforced, as long as the payments are being made properly.", "replies": [{"id": "ibrl1sj", "text": "Thanks! This makes me feel better. I wasn\u2019t sure if negotiating the banking stuff up front was worth it with this loan guy. He\u2019s kind of awful at answering direct questions and I can tell I will have to ask him the same question over and over again to get an answer", "replies": [], "depth": 4}], "depth": 3}, {"id": "ibrtyal", "text": "If it's going to be in there, then the funds you deposit in that account can be seized/controlled by them as soon as you fail to make a payment (up to a certain amount, depends on the state). This extra security is one reason why they want you to bank with them.\n\nThat being said, our group tries to keep significant deposits with a few regional banks that we like and that gets us really favorable loan and construction guaranty terms, so there are pros and cons depending on how it plays out for you.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ibraer0", "text": "Do they want you to switch all accounts to that bank or just open an account with them? I\u2019ve done the latter and used the account for all things related to that property. I don\u2019t see the big deal. Just make sure there are no service fees, charges etc", "replies": [], "depth": 1}, {"id": "ibrc6q2", "text": "Technically yes they can require you to use core banking services that aren't covered under \"anti tying\" regulations with them as a condition of a loan. Functionally, I've never seen anyone called in default because they didn't move a checking/savings account.", "replies": [], "depth": 1}, {"id": "ibrjgj7", "text": "This isn\u2019t uncommon. Banks need deposits to make loans, so it\u2019s typical for smaller \u201crelationship banks\u201d to require your deposit relationship. \n\nMost of the time it won\u2019t be a loan covenant, so strictly speaking there\u2019s nothing they can do. However, the two main consequences are (1) the next time you need a loan, they may tell you to fuck off since you didn\u2019t keep your deposits with them; and (2) if you ever find yourself in a technical default they\u2019re more likely to bust your balls about it versus letting it slide like they would with a good client who keeps their deposits there.  \n\nOn the other hand, if they actually make it a loan covenant, there should be a minimum balance requirement. You can\u2019t enforce \u201cyou have to bank with us\u201d nearly as easily as \u201cyou have to maintain at least $100k with us\u201d, so any lender that knows what they\u2019re doing will require a specific minimum. If it was going to be a covenant, you would likely know about it by know because the minimum balance is something that gets negotiated up front. \n\nUnless they\u2019re trying to get your treasury management/POS business, they care more about the balance than they do the activity, so a good middle ground (if their website sucks) would be to keep your operating account where it is now, but keep any excess deposits/savings in their bank and transfer them in/out as needed.", "replies": [{"id": "ibrkoi0", "text": "Thank you! This is extremely helpful. I asked the loan dude To spell out the banking requirements but he\u2019s awful at answering direct questions. He just blabbers on and on.", "replies": [], "depth": 2}, {"id": "ibsxtu1", "text": "This guy is spot on.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ibsaozc", "text": "Lendingmetrics.net alternative to bank loans, they specialize in commercial loans and loans for real estate investors.", "replies": [], "depth": 1}, {"id": "ibv7d92", "text": "I work in commercial lending. We love to bring on deposits when we do loans. Every bank can give someone a checking account but not every bank will lend. That said, I\u2019ve had borrowers bring over $1mm + in deposit balances prior to loan closing to take advantage of better loan pricing and theoretically, they could pull all that out the day after COE and we would do nothing. Luckily that hasn\u2019t happened to me, but if it did, it wouldn\u2019t affect the borrowers loan at all.", "replies": [], "depth": 1}]