Purpose of loan - does it matter?

Trick

Thinking of getting a loan for a car, therefore does it matter if you say its for Used or New car? in fact, does it matter what purpose the loan is for?

Fiddlestick

Trick wrote: »

Thinking of getting a loan for a car, therefore does it matter if you say its for Used or New car? in fact, does it matter what purpose the loan is for?

Well yes.

If you lie about the purpose then that's generally considered to be fraud.

Just put down whatever it is you want the loan for.

Sixstate_2

If its a car loan then its considered as extra debt. If its for debt consolidation then generally they look upon it replacing some existing debt. I'm not sure if its quite so simple but its best not to lie. As mentioned it can be considered as fraud.

tryingtogetsolvent

the interest rate of the loan can vary depending on what it is for.

Trick

Fiddlestick wrote: »

Well yes.

If you lie about the purpose then that's generally considered to be fraud.

Just put down whatever it is you want the loan for.

Thanks all.
Just for the record - I wasnt thinking of lying, was just curious!

BenL

Car is one of the better reasons.

Debt Consolidation for instance would prompt further questioning

gordikin

BenL wrote: »

Car is one of the better reasons.

Debt Consolidation for instance would prompt further questioning

...and a higher interest rate! New cars in the main come with 3 or 5 year warranties...2nd hand cars usually less.

immoral_angeluk

Sixstate wrote: »

If its a car loan then its considered as extra debt. If its for debt consolidation then generally they look upon it replacing some existing debt. I'm not sure if its quite so simple but its best not to lie. As mentioned it can be considered as fraud.

True in theory, but they will assess you as if you are taking out the extra debt.

An unsecured loan is an unsecured loan, regardless of what it's used for, and that's what the banks will base their decision upon.

Also worth noting that consolidation loans will more than likely ring alarm bells for creditors, as often there are deeper running debt problems which could mean the customer is high risk, therefore reducing their want to lend..

rachie76

Generally the purpose of the loan will determine the term the lender will be prepared to lend over.

For example if the purpose is stated as a holiday or Christmas, some lenders will not offer a loan for more than a 12 month term. Their logic is that these are yearly occurrences and therefore the loan should be cleared within a year.

A wedding, car or home improvements will generally be offered over a 3-5 year term and a consolidation loan will be over 5+ years.

I'm not saying these are hard and fast rules for all lenders but this should give you some idea why the purpose of the loan is needed on an application.

fozmcfc

I have in the past used other as a reason, even if it is mainly to consolidate.

I always think if you put down consolidate and you intend to consolidate debts with the same bank, then they are more likely to turn you down or offer a higher rate.

I have been asked once and I just stated I needed it for a holiday, new computer/laptop and to pay off some debts. In reality 90% of it was to consolidate.