Bank loan - two loans in quick succession for 35k with no human checks?

in Debt-free wannabe
7 replies 1.6K views
A close friend has made two loan requests via the "worlds largest bank" app  - one for 15k and one for 20k. This was used for gambling. It was all automated. 

I am very surprised they can approve such a large loan with no wait period or human checks for affordability/proof/loan use etc. They receive 1800 pm and spend 1300 pm on expenses.

They are in a bit of a pickle now as they have recently been approved and accepted for a house (currently rent) and will struggle to make payments.

My question is:
1. Is there any recourse in ensuring the bank does its due diligence for a loan they can afford?
2. The quick succession of large loan requests should surely flag as risk for further review?
3. What they should do now as they are worried the repayments when they pay the mortgage will not be always achievable


Replies

  • edited 20 June 2022 at 12:49AM
    longjohnjohnsonlongjohnjohnson Forumite
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    edited 20 June 2022 at 12:49AM
    vouch0r said:
    A close friend has made two loan requests via the "worlds largest bank" app  - one for 15k and one for 20k. This was used for gambling. It was all automated. 

    I am very surprised they can approve such a large loan with no wait period or human checks for affordability/proof/loan use etc. They receive 1800 pm and spend 1300 pm on expenses.

    They are in a bit of a pickle now as they have recently been approved and accepted for a house (currently rent) and will struggle to make payments.

    My question is:
    1. Is there any recourse in ensuring the bank does its due diligence for a loan they can afford?
    2. The quick succession of large loan requests should surely flag as risk for further review?
    3. What they should do now as they are worried the repayments when they pay the mortgage will not be always achievable


    1. What did their application say?  Banks don't typically lend people over 1.5 x their salary in unsecured lending unless the applicant provides figures that support that level of lending.  Credit files do not give salary information so indebtedness and payment history are the only external metrics the bank can work with. If these are positive, why not lend the money?

    2. If the requests were affordable, according to the details provided, I don't believe the speed of reapplications is particularly relevant to whether loans should have been declined.  At best it's a fraud issue, that will be paid for by the bank.

    3. They should ditch the mortgage application.  They clearly cannot afford to repay these loans and a mortgage and by continuing this farce, they're just setting themselves up for a lot of stress and trouble when they eventually get evicted.  Bear in mind that being accepted in principle for a mortgage doesn't mean they won't be checked again before completion, as lenders are worried about exactly this sort of thing.

    At best, even if they go to the FOS, they will be required to repay the capital.  There is no free lunch as they say.  That alone will torpedo any chance of a mortgage, and they will need to declare this debt to any lender, broker or solicitor they deal with.

    Tell them to speak to a debt charity ASAP.

    Edit: And a gambling charity
  • RASRAS Forumite
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    Brokers normally advise no new credit applications between acceptance and completion, as lenders run repeat checks before they hand over the money.

    So your friend needs to talk to their mortgage advisor and rescind their application before the mortgage provider picks it up and rejects them.

    Then speak to a gambling charity and debt charity like stepchange. Not a debt company that offer to reduce their debt by 70% and sells them an IVA.
    The person who has not made a mistake, has made nothing
  • sammyjammysammyjammy Forumite
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    Hmm sounds v familar!
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  • edited 20 June 2022 at 3:41PM
    sourcratessourcrates Forumite
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    edited 20 June 2022 at 3:41PM
    The "worlds largest bank" according to Google, is the Bank of China, but I suspect it may not have been that bank.

    If they gave their income and expenditure as per your post, then it would have resulted in an immediate decline, as neither loan would have been affordable, so its safe to say the applicant was less than truthful, when they applied (not unknown with gamblers).

    Lenders have no way of knowing your income, although they can ask for proof, they mainly rely on what you put in your application, an id check will confirm your identity, a credit check will show how you manage your money, but if they put that they earn 60k a year, then that`s the figure the lender must use as part of the decision making process.

    However two large loans virtually at the same time should have rang alarm bells, unless, as said above, the applicant exaggerated their income sufficiently, to make it seem affordable.

    As others have commented, the mortgage application process, in the majority of cases, requires a final credit check prior to the release of funds, if these loans are showing on the persons credit file at that time, then the game is over, and there will be no mortgage.

    As things stand, even if, by some miracle, it was approved, their income is insufficient to meet all there financial commitments, so either the mortgage, the loans, or most likely both, will end up in default, and then repossession and possible bankruptcy will follow, if this is a legitimate post, then that will be the likely course of events, if it isn`t, thank you for watching.
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  • vouch0rvouch0r Forumite
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    The "worlds largest bank" according to Google, is the Bank of China, but I suspect it may not have been that bank.

    If they gave their income and expenditure as per your post, then it would have resulted in an immediate decline, as neither loan would have been affordable, so its safe to say the applicant was less than truthful, when they applied (not unknown with gamblers).

    Lenders have no way of knowing your income, although they can ask for proof, they mainly rely on what you put in your application, an id check will confirm your identity, a credit check will show how you manage your money, but if they put that they earn 60k a year, then that`s the figure the lender must use as part of the decision making process.

    However two large loans virtually at the same time should have rang alarm bells, unless, as said above, the applicant exaggerated their income sufficiently, to make it seem affordable.

    As others have commented, the mortgage application process, in the majority of cases, requires a final credit check prior to the release of funds, if these loans are showing on the persons credit file at that time, then the game is over, and there will be no mortgage.

    As things stand, even if, by some miracle, it was approved, their income is insufficient to meet all there financial commitments, so either the mortgage, the loans, or most likely both, will end up in default, and then repossession and possible bankruptcy will follow, if this is a legitimate post, then that will be the likely course of events, if it isn`t, thank you for watching.
    Thanks sourcrates, they have declared their salary of 29k both times correctly and no decline what so ever - immediate approval for 2 loans of 15 and 20k..

    I am curious if the FOS would entertain the case. Seems like a case of mislending and not performing enough due-diligence to me. The loans are at 16% apr!  Sounds like the company (not china) place all the onus on the loan applicant to ensure its affordable. 


    i appreciate the seriousness of your post and the other responses and will relay the facts to them. 

  • enthusiasticsaverenthusiasticsaver Forumite, Ambassador
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    I find it very strange that they have recently applied and been accepted for 2 large personal loans and a mortgage on fairly average salaries. Has the money actually been released on either of these? If the loans are on a fairly high interest rate at 16% that would also indicate a poor credit record. Has the mortgage been agreed by a high street lender? 
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  • fergie_fergie_ Forumite
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    When I was looking to finance a new car, I planned to borrow 25k unsecured at 2.8%. I initially applied with Tesco which was 'approved' online, but I had to sign physical paperwork to accept. In the meantime I found a better deal with Nationwide which was approved and funds released instantly. I never completed the Tesco paperwork, but in theory I could have borrowed 50k and 'beaten' the credit checks as they didn't have time to hit my credit file - which most lenders rely on.

    I'm not condoning it, but the same applies with opening new credit card accounts - you can get several in quick succession, but it will then hammer your credit score when it updates.
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