How do lenders check how you will use loan funds?

oceanscape

I got accepted for a loan for debt consolidation, but now I need to use part of it for an emergency home repair.

When you receive a loan for debt consolidation does the lender usually pay it straight to your creditors or into your bank account on the condition you will pay the creditors yourself? What would happen if I retained some of the money and didn't pay off all my debt?

Thanks.

lippy1923

They usually put it in the account of your choice. As far as I am aware once you have it all they care about is that you pay it back.

oceanscape

lippy1923 wrote: »

They usually put it in the account of your choice. As far as I am aware once you have it all they care about is that you pay it back.

Thanks. My worry is that the broker who secured the loan said it only got accepted on basis of me using it to repay my existing debts.

lippy1923

I could be wrong. I personally know a (stupid) person who took out a loan to pay off his credit card... he then p***ed it all away on a unnecessary trip abroad.

What is the emergency home repair?

DCFC79

You use it for whatever you want now its in your account. I'm not an expert mind.

izools

If you default on the loan and the creditor take you to court due to continued non payment then technically charges of criminal fraud can be brought against you if they call for evidence from your bank in the form of bank statements that show you used the loan for purposes other than debt consolidation.

Some sub prime lenders back in the day used to make cheques out directly to the applicant's other lenders when approved for consolidation loans but these days any applicant with a dodgy enough credit history to prompt action like that is just outright declined.

Can you comfortably afford to service the loan and your other debt(s) if some is used to repair your house?

Is it perhaps something covered by contents or buildings insurance?

Is it something yourself and / or some friends can do yourselves?

Apples2

This is precisely why consolidation loans have been generally difficult to acquire.

It happens all to often that the loan is agreed but all of a sudden the borrower finds a better use for the money so leaves a whole pile of debt untouched.

The consolidation loan was requested usually because the multiple repayments have become unmanageable but now the borrower has the same repayments but also another loan to repay.

Ask yourself what you would have done had the loan been rejected and do that.

ferry

Just curious,but what is the point at the application stage of asking for the purpose of the loan in that case?

gb12345

janeelissa wrote: »

We must accept finite disappointment, but we must never lose infinite hope.

Lets play spot the spammer posting inane comments.

iolanthe07

gb12345 wrote: »

Lets play spot the spammer posting inane comments.

It would make a good sig though. It's quite profound, really, when you think about it.

oceanscape

So I've got the paperwork to sign and send back. It's a £17,000 secured loan. Included is a sheet where I have to write all my lenders details, balance outstanding and account numbers. So surely they will just be paying the lenders directly if they need this detail?