How do lenders check how you will use loan funds?

cos_2

oceanscape wrote: »

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.

I've been there a few times in the past! Anyhow, on each occasion I've paid off what I needed to keep my other creditors satisfied, usually the full debt, but not always.

But how could my new lender know what I did with the cash? It was paid straight to my bank account and that was their last link.

I can't see any issue to be honest. I'm guessing you have your finances under control by previous responses!

Good luck.

Apples2

Work this out from the OP

September 12
http://forums.moneysavingexpert.com/showpost.php?p=55543273&postcount=1

Does house insurance have to be in the owner's name? My parents own (with a mortgage) the house I live in. Does the home insurance policy need to be in their name, or is it fine for me to arrange it in my name?

February 13
http://forums.moneysavingexpert.com/showpost.php?p=59298109&postcount=1

Can I add my mother to my house deeds? Can I add my mother to my house deeds if I get the permission of my mortgage company, and also have her name added to the mortgage?

What is the chance the mortgage company would allow this?

The reason I want to do this is to help her consolidate her debts via a secured loan. Obviously she needs to be a "home owner" to get such a loan. Yes, I know that I will lose my house if she fails to pay and I have indeed considered this.

bodmil

Oh heck, poor Ma and Pa, give them strength!

sunflower_2

all very strange apples2

OP many moons ago i took out such a "consolidation loan" via a broker.
the £11k was secured on my home.

I too was asked for all creditor details, acc numbers and balances owed etc.

The broker told me over the telephone that I would receive cheques made payable to my creditors.
She then went on to explain that as all of my credit accounts were with Barclays (barclaycard, loan and overdraft) that I should just state "BARCLAYS BANK" as the creditor, with the differing account numbers etc.

She advised if I did this, I could pay all cheques into my personal barclays account just by adding my bank account number and sort code to the back of each cheque, and using a paying in slip or a note saying "please credit these to my account 01234567".
The lovely lady told me she advised people to do this all the time.

Being foolish and thinking of shopping sprees aplenty - I took her stupid advice!

Thankfully I made enough profit on that house to clear the secured loan, or things could have turned very sour indeed.

I can honestly say 100% of that £11k secured on my home was totally wasted.

:A

jamesd

It's easy enough: if you sign the application while knowing you will use the money for a different purpose than the one declared, you'll be engaging in application fraud.

Whether the lender pays the money directly or not, they can get your credit record in a couple of months and see how much money has been paid off each account. At that point you end up with a lot of explaining to do. They probably wouldn't seek criminal prosecution. They probably would make a negative entry at CIFAS. They probably wouldn't seek immediate repayment and possession of the security for the loan.

You do have some alternatives to criminality:

1. Use the money as described then use the credit facilities that have been paid off to fund the emergency repairs.
2. Discuss the emergency with the lender and see what they will accept.

Neither of those is in any way contrary to the law so you'll be fine if you do either of them unless you're required to undertake not to reborrow after clearing the debts.

Hang_Tight_Harry

oceanscape wrote: »

and assume that all people who ask questions on here are idiots.

If the cap fits....:D

dealer_wins

A car crash waiting to happen IMO. Give it 2 or 3 years before OP comes on here howling hes been mis-sold.

"I took out a consolidation loan, but the lender didnt make sure I paid off the debts being consolidated, surely they have been irresponsible and I can get my loan written off. If not I will be homeless within a month"

[Deleted User]

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.

People end up on this forum for different reasons, some because they want to take advantage of financial knowledge, some because they have made financial mistakes but everyone is here because they want to help.

If you're not happy being given advice (which is from people that have made the same mistakes they think you're about to make) then just walk away from this thread, don't reply. Telling people to go away or to shut up is not appropriate, all they want to do is help you.

randomnut

How about everyone stop trying to help this idiot. Someone with an attitude like that clearly doesn't deserve the goodwill of anyone unitl they get off their high horse.

Let them go and pay some hard earned money for some financial advice rather than receive it for free from the good people here and be completely ungrateful.

27col

cos wrote: »

I've been there a few times in the past!

I can't see any issue to be honest. I'm guessing you have your finances under control by previous responses!

Good luck.

It seems to me that anyone who has need of a consolidation loan is far from having their finances under control.