Using loan money for changed purpose

Mr_Incredible

Lets say you get a loan for a car or a home improvement but after you get it, you don't fancy that car any more, or you don't fancy that conservatory anymore, you'd rather buy a car etc etc

Do you have to ask the banks permission to spend it elsewhere, this is on the basis that the loan isn't secured against anything.

I'm assuming that once the bank have assessed your credit and approved the loan it doesn't really matter to them what you do with the money so long as you pay it back as you are assessed on your ability to pay back nothing else.

Anyone actually know?

bargainbetty

As far as I know, as unsecured loan is an unsecured loan. You do not have to use the funds as the application 'item' is not legally binding.

This is one of the reasons people find it hard to get 'consolidation' loans, because the bank cannot legally force you to spend it in any specific way.

Bravehearted_2

It's still technically fraud. You will have lied to gain credit.

If you don't fancy the item you borrowed for, then return the money?

Tiddlywinks

Mr_Incredible wrote: »

Lets say you get a loan for a car or a home improvement but after you get it, you don't fancy that car any more, or you don't fancy that conservatory anymore, you'd rather buy a car etc etc

Do you have to ask the banks permission to spend it elsewhere, this is on the basis that the loan isn't secured against anything.

I'm assuming that once the bank have assessed your credit and approved the loan it doesn't really matter to them what you do with the money so long as you pay it back as you are assessed on your ability to pay back nothing else.

Anyone actually know?

Well, they may find it strange if you apply for another £15k for a conservatory within a short time of the last application for the same thing... but that's it.

Why are you asking? I sense a cunning plan...

Mr_Incredible

hypothetical only, thanks guys.

All things considered its probably as wise to just phone and say, hey listen, i'm not fixed on that car any more but I'll still pay your loan back as per the repayment period agreed or maybe earlier, unless you want me to pay it all back now so you get not interest as 9If there's no overpayment penalty) ahahahaha!

Pretty sure they'd say, no sir thats fine, take you time !

Tiddlywinks

Mr_Incredible wrote: »

hypothetical only, thanks guys.

All things considered its probably as wise to just phone and say, hey listen, i'm not fixed on that car any more but I'll still pay your loan back as per the repayment period agreed or maybe earlier, unless you want me to pay it all back now so you get not interest as 9If there's no overpayment penalty) ahahahaha!

Pretty sure they'd say, no sir thats fine, take you time !

Why would you do that though? Pay interest on money that you have borrowed and no longer need is madness.

opinions4u

If you lie about your reason for loan, that's fraud.

If you change your mind after obtaining the loan, it isn't.

As long as you carry on paying them, they won't care.

Even if you later default, the likelihood of being hauled before the beak is somewhere low down the scale of marginally above nil.

Mr_Incredible

Tiddlywinks wrote: »

Why would you do that though? Pay interest on money that you have borrowed and no longer need is madness.

Er well to buy something else hence the title of the thread

custardy

Bravehearted wrote: »

It's still technically fraud. You will have lied to gain credit.

If you don't fancy the item you borrowed for, then return the money?

would the loan company accept the money back at £0 cost?

guesswho2000

custardy wrote: »

would the loan company accept the money back at £0 cost?

Yes, if you cancel the agreement within the time period stated in the contract (usually fourteen days or something).

opinions4u

guesswho2000 wrote: »

Yes, if you cancel the agreement within the time period stated in the contract (usually fourteen days or something).

Unless it was signed on trade premises (e.g. branch office).

Then there's no obligation to charge no interest.