Personal loan not so personal

B

bunyip

New Member
Today just found out that when applying for a personal loan you must prove what the money is for, eg provide invoice or quote
and then the bank directly pays them.. you don't get the cash!

This sounds insane to me. I feel like I was born yesterday. :(
 
There is no regulatory obligation on the lender to do this - although they may choose to do so for some loans or some people based on their appetite for risk.

Try another lender - but be aware your credit risk score gets worse each time you try....
 
Who's that with? Seems it may be a logical progression in the industry as I have a friend who works in loan approvals, reckons only about 20-40% spend it on what they say they will. As long as it's repaid it shouldn't really matter
 
Also, what interest rate are they chzrging to create fiat digits out ofthin air?

And is there a contract with two signatures?
 
Had a job in exmouth thwe bank would not lend me 10k to get started did the job anyway (borrowed it from a nate) and while I was away the missus went and borrowed 30k so I could do the job? go figure they lent me 30k but would not lend me 10K?
 
it depends on the bank, some give cash some want an invoice and will only make the funds out to the payee on the invoice.
Personal loans are a banks biggest loss item. So many of them don't get paid back and are usually written off due to no security being held.
 
Your credit contract mostly likely specify its an unsecured loan without liens on what it was used to purchase, but if the loan is non-performing (i.e. debtor does make repayment) the bank have it on record what was purchased with the loan. Thats helps the bank offload the loan to the debt buyers (i.e. debt collectors) because the collectors can target something specific for repo. Legally, it doesn't have a leg to stand on, but it won't stop collectors making ridiculous threats.

I've known 19y/o kids who borrow $3,000-$4,000 for a in-car entertainment system, some expensive electric guitar or even an oversized TV when they first move out.

Of course they never budgeted their repayments, next thing you know, these know-nothing kids miss payments, they debt gets passed off to the collectors who are more than happy to threaten to 'lawfully sieze' their toy.

Collectors only want cash of course but having something to specifically to threaten the debtor with is convenient for them. Intimidation tactic.
 
BigSteve said:
There is no regulatory obligation on the lender to do this
Click to expand...

That is true, however it is prudent lending policy to ensure that the loan is for a sound purpose, and to ensure that the bank may wish to control the release of funds to ensure that the borrower is not deviating from the purpose. In my banking career I recall 2-3 people that withdrew their loan application when I told them the loan money will be given as a bank cheque to the car seller upon production of the sales invoice. Clearly their intent was something else!

If not a sound purpose or borrower is lying about anything then it increases the risk of the loan not being repaid. I can understand why a stacker would not want to disclose that he is stacking but you are pushing it uphill to cash out a personal loan.

If anyone sits down to think about it, its a reasonable position for the bank to take., if your best mate asks to borrow $500 from you, you should be asking three questions.
1. what for
2. how will you pay me back (ie where will that money come from
3. when will you pay me back

If happy with all 3 answers, you will probably lend it. But you probably wouldnt if he wanted the money to get on a bender at the races.
 
House said:
Who's that with? Seems it may be a logical progression in the industry as I have a friend who works in loan approvals, reckons only about 20-40% spend it on what they say they will. As long as it's repaid it shouldn't really matter
Click to expand...

Peoples choice, nearly 12%
 
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