Principal Without Principle

This week I went to my bank – which will remain nameless, at least for now – to inquire about getting a car loan.

When the banker asked about my income, I told her the truth, which is that I make about $200 a week, or $10,000 a year.

“I’ll just enter $25,000,” she replied, punching in the numbers.

“I don’t make nearly that much,” I said.

She gave me a warm smile. What she said next blew my mind, and I can’t remember her exact words, but the message was this: “Well then, let’s hope no one checks it.”

Fifteen minutes later I was pre-approved for a loan of up to $10,000 (five times what I sought) at the very good interest rate of 3.92 percent. I should have been happy. But I just felt weird.

The ongoing foreclosure crisis was brought about in large part by exaggerated statements of income on loan applications. I figured the catastrophic results were enough that income verification would have become the de facto standard by now.

Don't tempt me.

Alas, it’s not. The lessons of the crisis have apparently been lost on my bank, which has more than 3,000 branches in the U.S. The banker who approved me didn’t just believe me when I said I made $200 a week (which could have been a lie), but led the institution to believe that I make even more.

Fortunately, I already have the money I’m going to use to pay off the loan. But what if I didn’t? What if I just really wanted a car, and knew that taking out a loan was the quickest way to get one?

If I defaulted, I imagine the bank would just take my car, auction it off, and call it a day. And, of course, my credit rating would be sunk – but that would affect me alone.

I guess that’s why the banker felt that she could insert a wildly inaccurate figure for my income. I get the loan, she gets the commission, and everyone’s satisfied. At least for a few months.

Having never spoken to a banker without my parents’ mediation, I expected the conversation to bear some resemblance to talking to my high school guidance counselor. I expected to talk to some benevolent expert who would take into account my assets (good credit thus far) and liabilities (low income) and advise me earnestly as to my best course of action. Now I know better.

But I still have one question: Why ask about my income if you don’t care about the answer?