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Where is your best banking value?

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Rates, or advice? If you ask most Bay Area people if they want the highest interest rate on bank deposits and the lowest interest rate on bank loans, chances are they will respond with a resounding “Yes!” But in reality, that is not always the case. Just like the person in Benicia who has a plumbing problem and wants to fix it herself. Will she go to one of the big box stores that have low prices but not the most knowledgeable personnel? Or, will she go to the local hardware store, with knowledgeable staff that can explain the details, demonstrate how to fix the problem but charge a higher price for the materials? It depends upon how you define “value”. For some, the value is in obtaining the lowest price, but for others it is the knowledge they receive from an expert. The same is true in banking from Sonoma to San Jose. If you want the absolutely lowest possible loan rate, you can shop around until you find it. You may also want to learn how that institution handles your loan if, unforeseeably, you run into problems. Will they be willing to work through a difficult time with you when your payments may not be timely, or will they threaten foreclosure if you find yourself in a financial jam? Probably a good idea to learn what their policy is in advance, not when you suddenly have a financial emergency.
To be clear, banks take a risk on you and your ability to repay when you take out a loan. Realistically, they know not every loan will perform as agreed. If every loan did, we would all be living in Paradise. Every bank has a philosophy in how they handle “workouts”. Some play hardball while others take the time to discover what has happened to cause this interruption in your repayment plan. Generalizations are frequently foolish as there are always exceptions, that said, I am going out on that ever so fragile limb. A community bank, who knows you and your character, holds your checking and savings accounts and knows your ability to handle your accounts as agreed, is more likely to work with you in creating an alternative arrangement to see you fulfill your obligation and see the bank made whole. Again, generally speaking, as I am sure there are folks who may have had a community bank play hardball with them. Like the independent hardware store employee who knows he may have to spend considerable time with you to show you how to make a repair, and knows that you likely will return if you botch the job, the community banker has a vested interest in seeing you succeed. She or he is much more likely to work with you than to hit the foreclosure button after an economic hiccup. Heaven forbid if you run into trouble with a big bank. Our recent recession was fueled by thousands of Bay Area foreclosures in real estate. Many people were put into homes with mortgages they couldn’t afford by unscrupulous bankers. When they could no longer make their payments, the first word out of their banker was “Foreclosure!” Community bankers tend not to put someone in a mortgage they can’t afford in the first place. So think about what value means to you, is it the best rate, or the best advice?

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