best purpose for personal loan ?

allsam18

Hi,

What is the best purpose for personal loan ? Is is the car ?
Do the bank require proof of buying a car for personal loan ?
I can´t get any personal loan in any bank for my investing in securities...

Jim2007

Well first of all borrowing to invest is one of the big no nos...

And yes banks do tend to expect supporting documentation...

And also obtaining money by deception is called fraud, a criminal offense should the lender decide to make a formal complaint to the Garda!

368100

There's a good reason why banks won't lend now to fund investments in securities. Only gamble money that you can afford to lose....otherwise you'll have a loan to pay with nothing to show for it.

The other poster is right....technically it's deception/fraud and you could be taken to court. In reality though it'd be too much hassle for a bank to do this for a smaller loan amount so they wouldn't bother, but if you weren't able to pay back the loan and they took you to court to secure repayment, the judge wouldn't look kindly on it at all and you'd have no chance of getting an agreement in your favour.

Loan agreements include a covenant to use the funds for the purposes declared in the application so you would be in breach of this and the bank could call in the loan straight away if it wanted to.

LincolnHawk

A loan for gambling, nice.
What sort of a return are you expecting over the APR you will be paying on the loan?

Jim2007

Jim2007 wrote: »

And yes banks do tend to expect supporting documentation...

Is this common? I've never been asked before?

Jim2007

Deleted User wrote: »

Is this common? I've never been asked before?

A lot depends on how well they know you and how you behave. If you look at some of the OPs posts he seems to be looking for a loan as a new customer so you can bet they will be looking at the transaction very carefully if they decide to go with him.

Also things like for instance if you got a car loan and wanted to have the money transferred into another account in you name at a different bank might prompt them to follow it up with a request for documentation. Normally people buying a car want to pay the money in the account of a garage, get a bank draft or cash to pay for a car and so on.

Jim2007

Jim2007 wrote: »

A lot depends on how well they know you and how you behave. If you look at some of the OPs posts he seems to be looking for a loan as a new customer so you can bet they will be looking at the transaction very carefully if they decide to go with him.

Also things like for instance if you got a car loan and wanted to have the money transferred into another account in you name at a different bank might prompt them to follow it up with a request for documentation. Normally people buying a car want to pay the money in the account of a garage, get a bank draft or cash to pay for a car and so on.

Cool. Thanks. I asked cos I'm just about to pull the trigger myself. I've never been asked before but it's been a while. Maybe cos i started off small, and have worked up to higher amounts gradually

Thanks
Andy

coylemj

Jim2007 wrote: »

And also obtaining money by deception is called fraud, a criminal offense should the lender decide to make a formal complaint to the Garda!

368100 wrote: »

The other poster is right....technically it's deception/fraud and you could be taken to court.

Making a false declaration to obtain a policy of insurance is a crime, telling porkies to get a bank loan is not. Reckless borrowing is not a crime and the OP intends to repay the loan so there is no intent to defraud.

If you disagree, please quote a single case where someone was convicted of this imaginary offence.

dennyk

Taking out a loan to gamble with is quite possibly the worst financial idea ever. And it would be gambling; there's no way you're making a guaranteed return on the stock market high enough to make up for the loan APR and the capital gains taxes you'll be paying unless you're doing something very illegal. If there was a legal way to make such a guaranteed return, then the bank would be doing that instead of loaning money to you at the current personal loan rates.

coylemj

dennyk wrote: »

there's no way you're making a guaranteed return on the stock market high enough to make up for the loan APR and the capital gains taxes you'll be paying unless you're doing something very illegal

That is complete bunkum. Have you been tracking the stock market for the past few years?

FTSE 100 on June 13 2016: 6,021.10
FTSE 100 on June 9 2017: 7,527.33 - up over 25% in 12 months.

Even a passive (e.g. tracker) portfolio would easily earn enough to cover the interest and CGT. Not saying the gravy train will trundle on forever but the returns over the past few years have been pretty good.

dennyk

coylemj wrote: »

That is complete bunkum. Have you been tracking the stock market for the past few years?

FTSE 100 on June 13 2016: 6,021.10
FTSE 100 on June 9 2017: 7,527.33 - up over 25% in 12 months.

Even a passive (e.g. tracker) portfolio would easily earn enough to cover the interest and CGT. Not saying the gravy train will trundle on forever but the returns over the past few years have been pretty good.

Key word in my post is "guaranteed." Cherry-picking a particularly good year for the market is hardly any guarantee of success. Look, I can do that too:

FTSE 100 on February 13, 2015: 6873.52
FTSE 100 on February 12, 2016: 5707.60 (-17% in 12 months)

If you want to be more realistic, let's look at some longer periods:

3 years:
FTSE 100 on June 12th, 2014: 6784.92
FTSE 100 on June 9th, 2017: 7,527.33
Annualized rate of return: 3.52%

5 years:
FTSE 100 on June 15th, 2012: 5,478.81
FTSE 100 on June 9th, 2017: 7,527.33
Annualized rate of return: 6.56%

Even leaving aside the fact that past performance does not guarantee future results, I'd be shocked if you could find a bank that would offer an unsecured personal loan for significantly less than 6.5% APY, and that's not even taking into account the taxes.

Putting your own money into the market for the long term makes good financial sense because there is usually a positive return over a long period of time. Borrowing money at a high rate of interest to invest in the market in the hopes that your gains over the short term will exceed your interest rate is just gambling, plain and simple.

coylemj

dennyk wrote: »

Putting your own money into the market for the long term makes good financial sense because there is usually a positive return over a long period of time. Borrowing money at a high rate of interest to invest in the market in the hopes that your gains over the short term will exceed your interest rate is just gambling, plain and simple.

Agreed.

wordofwarning

Jim2007 wrote: »

And also obtaining money by deception is called fraud, a criminal offense should the lender decide to make a formal complaint to the Garda!

Although a certain major lender used to have TV ad with potential customer lying about the purpose of their loan eg the customer saying she want a loan for braces, but the subtitles said she wanted the loan for backpacking.

OP banks are quite strict on personal loans as they unsecured and higher risk