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Question re loan application

edited 30 November -1 at 1:00AM in Loans
16 replies 1.3K views
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  • CandyappleCandyapple Forumite, Board Guide
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    I am looking at doing my daughter in law a huge favour and applying for a 10k loan for her. Will the purpose of the loan have any bearing on the actual outcome? In real it's to help her with funding for uni, would i be better off saying this or maybe say its for a new car?

    cheers

    Isn't that what student loans are for? Surely she can apply in her own name, why does she need you, her mother-in-law (as in not even her own parents) to take out a loan for her?

    Also, if your son works in London and is only 23 and paying high commute costs, I'm assuming he must be earning mega bucks otherwise why didn't they buy closer? As he's earning so much, surely he doesn't need his mum to step in and pay for his wife's education?
    I'm a Board Guide on the Credit Cards, Loans, Credit Files & Ratings boards. I'm a volunteer to help the boards run smoothly, and I can move and merge threads there. Any views are mine and not the official line of moneysavingexpert.com
  • edited 14 May 2019 at 3:09AM
    kelevrazkelevraz Forumite
    192 posts
    edited 14 May 2019 at 3:09AM
    I am looking at doing my daughter in law a huge favour and applying for a 10k loan for her. Will the purpose of the loan have any bearing on the actual outcome? In real it's to help her with funding for uni, would i be better off saying this or maybe say its for a new car?

    cheers

    Can i be honest? I think if you feel the need to be dis-honest about why your taking the loan, especially if your specifically given the option to put what the loan is ACTUALLY for, that should be a red flag to yourself...

    I don't really think it matters what you put that the money is for... In my years, i've never seen an underwriter take a second look at the 'purpose' for the loan for more than statistical purposes, i've seen a lot of loan agreements and underwriting decisions, someone else may say different though..

    All they care about is that you're NOT using it for the things they specify you CAN'T use it for... housing deposit, gambling, for 'investment' purposes etc etc. And that you don't lie about your income/expenditure

    Whether you put the loans for home improvements / debt consolidation / car purchase - doesn't matter... If in X amount of years, you've lodged a complaint for irresponsible/unaffordable lending. The two things that will be looked at will be
    • Did you lie about how much money you get in? / Did the lender do enough to verify this?
    • Did the lender foresee a possibility that you'd use the money for something you SHOULDN'T have been using it for

    I've never seen a lender/FOS make the argument that 'you said the money was for a car, but then you went a built a new bathroom!'

    So no, in my opinion, it doesn't matter. But, above all, as people have mentioned, i think taking a loan for this purpose is simply a bad idea
  • SncjwSncjw Forumite
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    Why can’t she apply for student loan like other students so?
  • MEM62MEM62 Forumite
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    10k is not a gift :)

    It will be. Make sure that you can afford it.
  • SystemSystem
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    If they're struggling for cash they have no money to repay you. Unless you draft a legally binding loan agreement then you'll not be able to enforce the loan.

    If you're not prepared to and cannot afford to kiss goodbye to £10,000 then you should not be doing this. Your daughter in law is just going to have to do what other students short of money do and get a part time job. It is perfectly possible to work whilst doing a degree, both my brothers did their degrees (law and business) whilst doing full time jobs doing twilight shifts in a call centre.
  • stripeyfoxstripeyfox Forumite
    474 posts
    I suppose the risk is that the 10K will be swallowed up within a few months or less. And then what?

    I understand why you'd do it, but there remains the very strong likelihood the money will get spent and if they start to struggle, their repayment to you will be the first thing to be sacrificed.
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