Taking a unsecured loan as proof of fund

[macaly7]

Don't listen to us but just don't moan about it here if it gets rejected or worse yet if you get banned.

 

[dave111]

Sorry Alex,

"You can’t borrow this money from another person. You must be able to use this money to pay the costs of living for your family (even if they aren’t coming with you)."

Borrowed money is not the same as your own money.
CIC will potentially interpret this as misrepresentation and you may face a 5-year ban.

 

[Gruff]

Thank you very much for your detailed response.

However, I don't see the difference between having an existing unsecured loan from a past spending and taking a new loan to create some cash for the purpose of satisfying the fund requirement.

In both cases, the loan is only associated with the person, not the cashed generated from the loan, nor asset purchased using the loan. I am only speaking of a unsecured loan here. After taking the loan, I have cash that is unencumbered by debt, and some debt associated with me as a person. For example, what's the difference between, say,

1) I took a 20k unsecured loan to by a car a year ago, and now I have 20k cash (earned from income) in my cash account as the POF and the uncleared debt,

2) I took a 20k unsecured loan to created 20k cash, and now I have 20k cash (created from the loan) in my cash account as the POF and the uncleared debt.

In both cases, the loan stands on it's own as a liability to me as a person, and the cash is not associated with the loan. The cash is not encumbered by the loan or debt, and is not used as a security.

If 1) satisfies the POF, then 2) should also satisfy the POF.

Any idea, thanks?

In the example you’ve sited a loan taken to pay for a car would not be result in application rejection as the assumption is you can sell the car to pay the loan amount off.

It’s not simply about net worth it’s about proving your settlement funds only aren’t encumbered. You can take a 20k personal loan and a 8k gift deed and you’d be fine (as the gift deed is unencumbered).

Regardless of whether you agree with it or not taking out a personal loan of 20k (whether it’s secured or unsecured) to inflate your bank balance will result in an application rejection.