Demand for loan officers is on the rise — here’s what you need to know
Loan officers need to evaluate each individual’s financial history to determine what kind of loans are right for their clients. If you have a knack for numbers, a passion for finance, and love helping people, this might be the job for you.
Loan officers work with individuals and institutions to authorize loans and assist with major purchases: they help people buy homes, pay for weddings, go to college, and purchase cars, ensuring they can borrow the money they need at an appropriate interest rate.
The responsibilities of a loan officer may vary depending on th financial institution and client, but generally include the following responsibilities; some work primarily with individual customers, while others specialize in small business loans and capital.
- Greet customers at a bank or financial institution when they arrive.
- Meet with clients to discuss individual financial situations, needs, and options.
- Identify each client’s risks and loan opportunities.
- Educate customers about legal requirements, barriers, fees, and interest rates.
- Create a payment time frame to accurately calculate interest levels.
- File paperwork for loan approval.
- Evaluate and approve or deny loans based on risk factors and financial responsibility.
Most loan officers work at financial institutions, like banks or credit unions; they typically have small private offices used to meet with people throughout the day and discuss finances. The sizes of these institutions range by branch and region, from small banks with three or four employees to high-rise offices with a few hundred employees.
Credit card companies are also authorized to lend money to customers; typically, loan officers hired by credit card companies work in call center environments. Rather than having your own office, you’ll work in a cubicle surrounded by your coworkers. This environment can prove stressful for some, so make sure that you ask where and how you’ll be working before accepting a position as a loan officer.
Regardless of your employer, loan officers are provided with a computer and phone at their desk so that they can work with customers to get loans approved. Often, consulting with customers takes up the majority of a loan officer’s time, leaving little for paperwork or administrative duties. Occasionally, loan officers will need to meet with their superiors to get second opinions on loan approvals, or with their team for training and policy updates; more often than not, however, they make decisions on their own, so you need to be measured and decisive.
Most loan officers work traditional business hours: Monday through Friday from 9am to 5pm. Financial institutions are rarely open beyond these times. They can expect to have major holidays (like President's Day and Labor Day) off from work, in addition to vacation.
Some loan officers will need to travel to evaluate business investments before approving a loan; in these cases, they may work late or travel on weekends. Loan officers who work in call centers may have more flexibility with their schedules, signing up for different shifts.
The minimum requirement for becoming a loan officer is obtaining a high school diploma or certificate; however, many employers prefer that their candidates have bachelor's degrees in related fields, especially when a company or institution specializes in a particular type of loan. The following are a few relevant bachelor’s degrees:
- Risk Management
Having previous experience in customer service or with a financial institution are beneficial on job applications, but not necessary to those applying for loan officer positions.
Loan officers will need to undergo specific training on the legal requirements of loan approval at their financial institution. More specific training on risk management software, loan approval processes, and customer service practices are often mandatory as well.
46 percent of loan officers have fewer than five years of experience, 23 percent have between five and ten years of experience, and 39 percent have ten or more years in the field. After several years, many loan officers decide to become more specialized: mortgage lending and personal banking are two related fields to which loan officers often transition later in their careers. Experience in as a loan officer can lead to more specialized positions and higher pay.
Loan officers use basic logic and math skills to evaluate risk, but they also need to be personable and able to work with a variety of different customers. These ten skills are crucial for being successful as a loan officer:
- Mathematics: a basic understanding of math and algebra is required to calculate interest rates and payment plans.
- Risk Management: understand the risks of loan approval and find ways to reduce that risk.
- Logical Reasoning: use logic to evaluate risk in order to determine whether or not to approve loans.
- Office Software: many banks and financial institutions use common programs, like Microsoft Office, in addition to more specialized software.
- Customer Service: be friendly and professional with customers, even if you’re not able to authorize a loan. Stressful situations must be addressed calmly and resolved.
- Organization: loan officers need to keep track of important mortgage and loan paperwork for their customers.
- Listening: listen to customers’ concerns and offer well-researched, reasonable solutions to their financial problems.
- Language Skills: many companies look for loan officers who speak multiple languages to facilitate communication with customers of all backgrounds.
- Patience: loan officers must be patient with customers, who often struggle to understand complex financial regulations.
- Communication: clear communication of a customer’s options and opportunities is vital.
The average entry-level salary for loan officers is $65,000, typically offered to loan officers at credit card companies and smaller institutions. After a few years, your salary will likely grow; specializing or taking on more challenging projects, such as high-risk loans, can earn you as much as $75,000 annual salary.
According to Bureau of Labor Statistics, demand for loan officers is expected to grow by eight percent between 2014 and 2024. This growth is about as fast as the average for all American industries, and should contribute an additional 24,500 jobs. Despite the rise of online and mobile banking, many customers still want to speak with loan officers in person, especially when making significant financial decisions.
Loan officers who work at their institutions for several years and excel at their jobs may become branch managers, overseeing the operations of a financial institution as well as managing loan officers. Because branch managers handle all aspects of banking and lending at their respective companies, extensive legal and financial knowledge and experience is required.
Some loan officers may consider obtaining additional education to become loan underwriters or insurance agents. Since these are more technical aspects of finance, they require a deeper understanding of the risk factors involved.
Loan officers are caring, patient individuals with strong listening skills and the ability to offer sound advice and make logical decisions. If this sounds like you, start looking for jobs as a loan officer today!