Taking a unsecured loan as proof of fund

[slmvpvip]

Hi Guys,

I've got my invitation.

As I do not have savings, I am planning to take a unsecured loan (personal loan) in order to meet to the fund requirement.

It this approach going to work? If so, would I be required to have extra amount as compared to the CAD19,093 for 3 family members? Say, to take care of loan repayment after arriving Canada.

I am working and have monthly income at the moment.

Many thanks,
Alex

 

[DelPiero07]

No. This is not a good approach. You should not be taking loans to meet the minimum required funds.

 

[vorador]

Hi Guys,

I've got my invitation.

As I do not have savings, I am planning to take a unsecured loan (personal loan) in order to meet to the fund requirement.

It this approach going to work? If so, would I be required to have extra amount as compared to the CAD19,093 for 3 family members? Say, to take care of loan repayment after arriving Canada.

I am working and have monthly income at the moment.

Many thanks,
Alex

Borrowed money (loans included) will result in the rejection of your application. Source: https://www.canada.ca/en/immigration-refugees-citizenship/services/immigrate-canada/express-entry/documents/proof-funds.html

A possible workaround can be: one of your parents give you a gift deed. Search the forum on how to do so, there are some details on the steps of this. However, read and search a lot before doing it.

Police certificates and Proof of funds are the most critical part of the application so pay attention to how to secure them.

 

[Peacekeeper87]

Hi Guys,

I've got my invitation.

As I do not have savings, I am planning to take a unsecured loan (personal loan) in order to meet to the fund requirement.

It this approach going to work? If so, would I be required to have extra amount as compared to the CAD19,093 for 3 family members? Say, to take care of loan repayment after arriving Canada.

I am working and have monthly income at the moment.

Many thanks,
Alex

Categorically no. IRCC specifically asks for average 6 months balance on bank letter (Or 6 last bank statements) to look for evidence of a loan to reach minimum required funds. You can't do that.
If you're going to receive money from someone else, in that case you can provide gift deed.

 

[slmvpvip]

Thank you for your response.

I take different view on this matter.

I am well aware that IRCC disallow borrowed money. However, I believe a unsecured loan is different from borrowed money.

Borrowed money still belongs to the creditor, even though it sits in your account. The creditor can make a claim for this money.
A unsecured loan is a scheduled future liability with cash available at the present that entirely belongs to you. The cash acquired from a unsecured loan is not used as a collateral of any form, the bank cannot make a claim on the money, and use of the fund is not subject to approval from any party. Of course, if you were made bankrupt, it's a different story, but this is outside the scope of the requirement.

Furthermore, regulation 76(1)(b)(i) of Immigration and Refugee Protection Regulations states:

(b) the skilled worker must

(i) have in the form of transferable and available funds, unencumbered by debts or other obligations, an amount equal to one half of the minimum necessary income applicable in respect of the group of persons consisting of the skilled worker and their family members, or

http://laws-lois.justice.gc.ca/eng/regulations/sor-2002-227/page-17.html#docCont


The cash acquired from a unsecured loan satisfy the definition of 76(1)(b)(i). It is not used as a collateral of any form and is not subject to claim from any creditor. Use of the fund is not subject to approval from any party. Thus, it is unencumbered by debts or other obligations.

Finally, from what I have read, applicants with existing loans can still satisfy the fund requirement. There is no material difference between having an existing unsecured loan from past spendings and taking a new loan for the purpose of satisfying the fund requirement. In both circumstances, the applicant carries a scheduled future liability. Nether IRCC or the Regulation requires settlement of existing loans.

Above is my opinion on this matter. However, I lack practically experience on how IRCC handles such circumstance. If anyone have some practical experience on this matter, it would help immensely.

Much appreciated
Alex

 

[keebs]

Thank you for your response.

I take different view on this matter.

I am well aware that IRCC disallow borrowed money. However, I believe a unsecured loan is different from borrowed money.

Borrowed money still belongs to the creditor, even though it sits in your account. The creditor can make a claim for this money.
A unsecured loan is a scheduled future liability with cash available at the present that entirely belongs to you. The cash acquired from a unsecured loan is not used as a collateral of any form, the bank cannot make a claim on the money, and use of the fund is not subject to approval from any party. Of course, if you were made bankrupt, it's a different story, but this is outside the scope of the requirement.

Furthermore, regulation 76(1)(b)(i) of Immigration and Refugee Protection Regulations states:

(b) the skilled worker must

(i) have in the form of transferable and available funds, unencumbered by debts or other obligations, an amount equal to one half of the minimum necessary income applicable in respect of the group of persons consisting of the skilled worker and their family members, or

http://laws-lois.justice.gc.ca/eng/regulations/sor-2002-227/page-17.html#docCont


The cash acquired from a unsecured loan satisfy the definition of 76(1)(b)(i). It is not used as a collateral of any form and is not subject to claim from any creditor. Use of the fund is not subject to approval from any party. Thus, it is unencumbered by debts or other obligations.

Finally, from what I have read, applicants with existing loans can still satisfy the fund requirement. There is no material difference between having an existing unsecured loan from past spendings and taking a new loan for the purpose of satisfying the fund requirement. In both circumstances, the applicant carries a scheduled future liability. Nether IRCC or the Regulation requires settlement of existing loans.

Above is my opinion on this matter. However, I lack practically experience on how IRCC handles such circumstance. If anyone have some practical experience on this matter, it would help immensely.

Much appreciated
Alex

If you take a loan for example $20k and the balance in your account you’re showing is 20k. When you provide the bank statements for any account, loans and credit card then it would come just as if you don’t have any money because the loan minus bank balance would be zero. That’s my understanding but someone else can share their view or if they have other guidance for you.

 

[macaly7]

A loan literally means borrowed money. No matter what type of loan you get from the bank it's still borrowed money.

'unencumbered by debts or other obligations' You have an obligation to repay the bank

Either get a gift deed from someone or decline the invitation and go back into the EE pool while working on your savings. Otherwise, your application will get rejected.

 

[Peacekeeper87]

Thank you for your response.

I take different view on this matter.

I am well aware that IRCC disallow borrowed money. However, I believe a unsecured loan is different from borrowed money.

Borrowed money still belongs to the creditor, even though it sits in your account. The creditor can make a claim for this money.
A unsecured loan is a scheduled future liability with cash available at the present that entirely belongs to you. The cash acquired from a unsecured loan is not used as a collateral of any form, the bank cannot make a claim on the money, and use of the fund is not subject to approval from any party. Of course, if you were made bankrupt, it's a different story, but this is outside the scope of the requirement.

Furthermore, regulation 76(1)(b)(i) of Immigration and Refugee Protection Regulations states:

(b) the skilled worker must

(i) have in the form of transferable and available funds, unencumbered by debts or other obligations, an amount equal to one half of the minimum necessary income applicable in respect of the group of persons consisting of the skilled worker and their family members, or

http://laws-lois.justice.gc.ca/eng/regulations/sor-2002-227/page-17.html#docCont


The cash acquired from a unsecured loan satisfy the definition of 76(1)(b)(i). It is not used as a collateral of any form and is not subject to claim from any creditor. Use of the fund is not subject to approval from any party. Thus, it is unencumbered by debts or other obligations.

Finally, from what I have read, applicants with existing loans can still satisfy the fund requirement. There is no material difference between having an existing unsecured loan from past spendings and taking a new loan for the purpose of satisfying the fund requirement. In both circumstances, the applicant carries a scheduled future liability. Nether IRCC or the Regulation requires settlement of existing loans.

Above is my opinion on this matter. However, I lack practically experience on how IRCC handles such circumstance. If anyone have some practical experience on this matter, it would help immensely.

Much appreciated
Alex

Hi Alex,
Unfortunately, no matter how deep your interpretation may be, doesn't change the fact that it's a loan.
Unsecured loan is only unsecured from the perspective of the bank... If it chooses not to have a guarantee, so be it, it's the bank's choice.
A loan is a loan, and you will have to repay it sooner or later, unsecured or not. Exactly what VOs don't want.
My suggestion would be to get that money from someone else, and get a gift deed. You'll save yourself a world of frustration with IRCC.
Cheers.

 

[mgnlky]

Thank you for your response.

I take different view on this matter.

I am well aware that IRCC disallow borrowed money. However, I believe a unsecured loan is different from borrowed money.

A loan by definition is " the lending of money by one or more individuals, organizations, and/or other entities to other individuals, organizations etc." How you get that it is not borrowed money is beyond me.

 

[slmvpvip]

So if you guys are saying if someone has a 50K unsecured loan, they need 70K in cash for proof of fund? This doesn't sound practical.

 

[Gruff]

So if you guys are saying if someone has a 50K unsecured loan, they need 70K in cash for proof of fund? This doesn't sound practical.

My understanding is that you CAN have loans and debts as IIRC aren’t interested in your net worth however these can’t be debts or loans used solely to show proof of funds.

Basically if you have 20k in the bank and a 15k loan that was used for any other reason (E.g. to clear credit card debt) except as proof of funds this is fine so long as you can prove this.

If youhave 20k in the bank and took a 15k loan to now show you have the required amount they will not accept this as you technically only have 5k

As others have said best bet is to get a gift deed from a family member if possible or to save up.

If you take a loan out and can’t explain what it’s for your application will likely be rejected

 

[Gruff]

This is the post I usually refer people to from a forum member who spoke to IIRC

“I've just spoken to IRCC on the phone as I've seen this question asked many times and there's never been a consistent and authoritative answer. The agent I spoke to said the following:

The funds that you show as proof of funds must themselves be debt free. That does not mean that you need to be debt free yourself, nor does it mean that you must show additional funds which could be used to clear your debt: it simply means that you cannot have borrowed funds in order to prove that you meet the required amount. You must be able to demonstrate where the funds came from: This may mean providing bank statements etc as an officer can do whatever enquiries and ask for whatever documents he wishes in order to establish where the funds came from. It will be down to you to then provide this proof.

The lady was very clear that you must disclose all of your debts, including loans, student loans, car loans and credit cards. This is so that IRCC can be sure that you did not borrow funds to show POF. They are, however, not interested in your net worth at all and only want to be sure that the funds in your account are liquid and can be withdrawn at any time.

To be completely clear and to illiustrate the point: it is the specific funds that are in your account which must beunencumbered by debt. For example: If you have $15312 in your savings account (enough for a family of two) and you have credit card debts of $5000, then you do meet the proof of funds requirement, so long as you did not borrow that money from any source. Those funds are not considered to be encumbered by debt. If, however, you have $15312 and you borrowed $5000 from your credit card or took a loan in order to meet the POF requirement, then those funds are encumbered by that debt and that would leave you with a net balance of only $10,312 leaving you $5000 short.”

 

[slmvpvip]

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?

 

[DelPiero07]

Take the loan and let us know if it works out.

 

[mgnlky]

Take the loan and let us know if it works out.

Try this. But also remember, if you're caught lying on your application, you risk a 5-year ban.
So..may the odds be in your favor. ¯\_(ツ)_/¯