How do lenders check how you will use loan funds?

izools

I took out a secured loan about six-seven years ago and the lender requested details of the credit agreements I was consolidating.

They contacted them on my behalf and paid them off directly.

They didn't close the account however and all of a sudden I had a ton of empty credit cards and over the course of the subsequent six to twelve months managed to spend up on them again through "home improvements".

I then ended up having to declare myself bankrupt and offer my house back to the bank under voluntary repossession.

I thought lending of this type no longer existed. Guess I was wrong.

Not judging what you've done so far, but please please don't make the same mistakes I did :beer:

oceanscape

krisdorey wrote: »

Your attitude stinks to be honest, people who have vast experience in the industry give up their own free time to offer advice above and beyond and yet are shot down by people like you.

If you fully know what you are doing then why bother posting, you have already made up your mind and wont listen to reason so go ahead and spend the money on whatever you want if the bank lets you, add more debt (and in this case the worst kind of debt in it being secured) instead of consolidation which is the second worst sort of debt.

I await your full flaming, although to be honest Im done with this thread when there are other people to advise who are far more appreciative.

I just feel sorry for izools, DCFC, gb12345, Apples2 and the other contributors whose time is wasted.

Have you even bothered to read this thread? My QUESTION is WHETHER I CAN use the money as I please or whether the lender will pay the creditors directly.

DevCoder

oceanscape wrote: »

Well you sense wrong - so go away.

Speaks volumes, if you are not a troll then my last bit of advice is to either wake up and listen to what people are saying or we'll see you on the DFW or BR forums.

I'm out.

izools

oceanscape wrote: »

Have you even bothered to read this thread? My QUESTION is WHETHER I CAN use the money as I please or whether the lender will pay the creditors directly.

That's a question you will need to ask the lender.

It's very rare that a lender demands they pay the other creditors directly, often sub prime secured loans request this - my example was a loan from Welcome Finance before they went the way of the dinosaur.

From the sounds of things, they're asking for this information in preparation for sending the money straight to your other creditors - lenders who just deposit the funds in your bank account don't ask for anywhere near as much or as precise information as it seems you've been asked for by your lender.

I'm starting to get serious de ja vous here, Welcome secured just over £17,000 against my old house, too...

I know you don't want to be judged or told what to do but I feel it my obligations to say to you turn your back on that lender and run. Run for the hills and don't look back.

You'll find that although the APR on your loan is lower than your cards, the amount you pay is SIGNIFICANTLY more over the term of the loan.

A unsecured personal loan with an APR of 34.9%, repaid over five years charges approximately the same amount of interest over the term as a secured loan with an APR of 6.9% spread over twenty-five years.

Macca83_2

ferry wrote: »

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

Because there are certain things a lender will not allow you to borrow for.

A house deposit would be one.

They also want to know what you're spending their money on.

DevCoder

oceanscape wrote: »

Have you even bothered to read this thread? My QUESTION is WHETHER I CAN use the money as I please or whether the lender will pay the creditors directly.

Have you even bothered to read my reply?

No. Because no-one can answer your question except the lender.

The fact your broker advised of such and the lender is asking for creditor information would be a strong indicator though.

Last bit of advice, seriously.

I managed to get a lender to agree consolidation an they paid to my creditors, they insisted upon such as agreement to the loan.

Creditors paid off, all was ok but the credit lines were open. Thankfully I managed to persuade (and it took some persuading) the creditors to close those facilities down.

Short story is that only the lender can tell you if they will insist on paying the creditors, if they do the you seriously still need to consider the secured/unsecured part.

Im off to bed to avoid being wound up even more.

Macca83_2

oceanscape wrote: »

Have you even bothered to read this thread? My QUESTION is WHETHER I CAN use the money as I please or whether the lender will pay the creditors directly.

Cool the jets. Your money will be paid directly to an account of your choice. I think that was answered specifically several posts back.

DevCoder

izools wrote: »

I took out a secured loan about six-seven years ago and the lender requested details of the credit agreements I was consolidating.

They contacted them on my behalf and paid them off directly.

They didn't close the account however and all of a sudden I had a ton of empty credit cards and over the course of the subsequent six to twelve months managed to spend up on them again through "home improvements".

I then ended up having to declare myself bankrupt and offer my house back to the bank under voluntary repossession.

I thought lending of this type no longer existed. Guess I was wrong.

Not judging what you've done so far, but please please don't make the same mistakes I did :beer:

Almost the same boat izools, thankfully I managed to persuade them to close the credit lines, sorry to hear about your situation.

Whatever doesn't kill us makes us stronger though, right Ill raise a glass to you for what you've been through.

imoneyop

oceanscape wrote: »

Some people on here have a "holier than thou" attitude and assume that all people who ask questions on here are idiots and haven't bothered to think through the decisions they choose to make.

I know secured loans are the "lending of last resort" and I am FULLY aware of what I am doing. I don't need any advice in this respect and never asked for input on whether this type of product was right for me - so why waste my time and your own? My question was clearly phrased and it bugs me when people assume I haven't thought through my decision or need financial advice that I never asked for.

Wow you must be the most unappreciative member of this site I have seen.

I normally see this type of post from first time posters who don't like to be told they are wrong. I would have thought that a long time member like you would understand that experienced people (and judging by the advice I have seen them give to others that is what they must be) are giving their advice for free.

I don't see any one treating you like an idiot (although you certainly act like one), just asking if you understand the possible consequences of what you are doing.

I expect we'll see you back in 12 months asking if there is any way to avoid a secured lender reposessing your house due to non-payment. I wonder if anyone will be willing to give you advice?

izools

krisdorey wrote: »

Almost the same boat izools, thankfully I managed to persuade them to close the credit lines, sorry to hear about your situation.

Whatever doesn't kill us makes us stronger though, right Ill raise a glass to you for what you've been through.

Thanks man

It seems like a lifetime ago now; my credit management has turned completely on it's head, I started a new leaf when I was discharged and currently owe about nothing, and have a wallet full of platinum that's paid off in full each month

Good luck with getting the debt down, too. I'm sure you'll make it :beer: