Pre-approval 'successful' for bank

LOANS: Mr Paul Gurhy says loans pre-approval has so far been a "highly successful" business for Bank of Ireland, particularly in urban areas such as Dublin, where many customers can find it difficult to make personal visits to their nearest bank branch.

This pattern fits in with consumer credit patterns in the wider economy, an upward spiral that last year caused the governor of the Central Bank, Mr Maurice O'Connell, to express concern about "the rapid expansion of credit".

Private sector credit has been growing by more than 20 per cent a year for the past number of years and, although there have been recent signs of a decline in the pace of growth, the issue remains live.

The Republic, as a people, appears to have accepted borrowing into their hearts.

All loan providers ask borrowers to give some indication of the reason for their loan, ostensibly so that customers can be matched with the right product.

At Ulster Bank, the most common reason for taking out a personal loan is a car purchase, but Mr David Beattie admits that the bank will not go so far as to seek proof that a car is actually bought.

Of greatest concern, he says, is that a customer would commit to a long-term loan for a short-term purpose.

Therefore, Ulster Bank hesitates to lend over three years for a two-week holiday, but might consider it for a once-off round-the-world trip lasting six months.

"We do want to be responsible," he says.

At Bank of Ireland, a similar policy applies, although Mr Gurhy says that a policy of flexibility on lending allows some leeway.

"On the form, there's a place where we ask them what they're going to use it for. It's just for statistical purposes. We know that some people use it to clear their credit card and we're fine with that."

Mr Gurhy says that about one-third (30 per cent) of Bank of Ireland's personal loans are made for the purposes of home improvement, with cars (24 per cent to 27 per cent) and holidays (23 per cent) constituting the next biggest categories.

Among the more unusual loan purposes in recent years have been cosmetic surgery or dental work, according to Mr Gurhy.

He estimates that the average personal loan approved by Bank of Ireland currently amounts to about €5,700 (£4,500).