They use computer programs to determine the size of loan for which applicants are qualified. Loan officers try to lower their firm's risk by getting collateral from the borrower. Collateral is a security pledge for the payment of a loan. For example, when lending money for a college education, the bank may require the borrowers to use their house as collateral. If that borrower were unable to repay the loan, the borrower would have to sell the home to pay off the loan.
Loans backed by collateral also help the customer because they usually have a lower interest rate.
Loan officers generally specialize in commercial, mortgage, or consumer loans. Commercial, also called business, loans help companies pay for new equipment or expand their business. Mortgage loans are used to buy real estate or to refinance a property. Consumer loans include automobile and personal loans. Loan counselors meet with people who need a loan but do not qualify for loans with banks.