how financial “underwriting” works


how financial “underwriting” works

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In the insurance world, underwriters determine whether an insurance agency should undertake the risk of insuring a client. They determine the risk and exposure of clients and also how much insurance should be granted to a client, how much they should pay for it and whether or not to offer an insurance policy to the client in the first place.

In the securities market, underwriting involves determining the risk and price of a particular security. It is a process seen most commonly during initial public offerings, wherein investment banks first buy or underwrite the securities of the issuing entity and then sell them in the market. This ensures that the issuers of the security can raise the full amount of capital while earning the underwriters a premium in return for the service.

Underwriters in the banking sector perform the critical operation of appraising the credit worthiness of a potential customer and whether or not to offer it a loan. They appraise the credit history of the customer through their past financial record, statements, and value of collaterals provided, among other parameters.

Worked for an online car buying business with the tall glass vending machines filled with cars. As an underwriter for the online purchases, I basically ensured we had the proper documents on file to move forward with the purchase and setting up any sort of loan contract – most of these vehicle purchases were financed via loan either through the company’s loan drafting partner or through the purchasers desired third party. Once proper documents were on file, we manually checked said documents and ensured proper regulations were followed/they are actually the appropriate documents (can’t tell you how many random images we got of just about anything you can think of unrelated to purchasing a car online). If a loan is involved, we do some basic number checks based on the income documents and plug those numbers in to ensure the system is ok with approving the loan. From there, once everything was given the green light and the purchase was going to move forward, we’d reach out to the purchaser and schedule the delivery/pickup appt. *As a word of caution, I would strongly recommend NOT working for OR buying a car from this company, but please do your own research before making any serious decisions.