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Acceptable and unacceptable uses of personal loans

SoCalGardener
Established Contributor

Acceptable and unacceptable uses of personal loans

The other day I logged on to Amex to look for info on personal loans, so I could reply to a question. While I was there, I read something that piqued my interest--and had me scratching my head:

 

==================

What can I not use my loan funds for?

Personal Loans may not be used for post-secondary education expenses, real estate, business, securities, vehicle purchases (other than as down payment for a vehicle), to pay down balances on American Express-issued Cards or any purpose prohibited by law or not otherwise permitted by these terms and conditions or your Loan Agreement.

==================

 

My question is, how would they know WHAT you used it for?! If I got a loan and put the money in my BofA checking account, and then went about paying for....whatever....how would they know? Say I used it to buy a car, or to pay tuition, or buy textbooks, I don't get how they can regulate this.

 

Please clue me in! Smiley Happy

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Message 1 of 18
17 REPLIES 17
Janus
Senior Contributor

Re: Acceptable and unacceptable uses of personal loans

Did you ACH the finds from Amex to BofA? Then they would be able to find out if they really wanted to know what you were spending it on.

 

My question is, why would they mention paying on Amex Cards when people get loans to pay down CC's all the time? lol

I do understand why you can't BT from one Amex card to another, but using loan funds to pay off a Amex card seems totally reasonable to me.

Vehicle purchase is another odd one, while I wouldn't because APR's are higher on personal loans than auto loans, I'm not sure why they have to include it.  TBH they seem to restrictive to me because once you co-mingle that loan with your other finances there's no proof who's Money went to pay for what. 






Message 2 of 18
SouthJamaica
Super Contributor

Re: Acceptable and unacceptable uses of personal loans


@SoCalGardener wrote:

The other day I logged on to Amex to look for info on personal loans, so I could reply to a question. While I was there, I read something that piqued my interest--and had me scratching my head:

 

==================

What can I not use my loan funds for?

Personal Loans may not be used for post-secondary education expenses, real estate, business, securities, vehicle purchases (other than as down payment for a vehicle), to pay down balances on American Express-issued Cards or any purpose prohibited by law or not otherwise permitted by these terms and conditions or your Loan Agreement.

==================

 

My question is, how would they know WHAT you used it for?! If I got a loan and put the money in my BofA checking account, and then went about paying for....whatever....how would they know? Say I used it to buy a car, or to pay tuition, or buy textbooks, I don't get how they can regulate this.

 

Please clue me in! Smiley Happy


In response to your question, they can't possibly know.

 

The question I have is why do each of these restrictions exist?


Total revolving limits 698000 (605000 reporting) FICO 8: EQ 721 TU 742 EX 715

Message 3 of 18
SoCalGardener
Established Contributor

Re: Acceptable and unacceptable uses of personal loans


@SouthJamaica wrote:

@SoCalGardener wrote:

The other day I logged on to Amex to look for info on personal loans, so I could reply to a question. While I was there, I read something that piqued my interest--and had me scratching my head:

 

==================

What can I not use my loan funds for?

Personal Loans may not be used for post-secondary education expenses, real estate, business, securities, vehicle purchases (other than as down payment for a vehicle), to pay down balances on American Express-issued Cards or any purpose prohibited by law or not otherwise permitted by these terms and conditions or your Loan Agreement.

==================

 

My question is, how would they know WHAT you used it for?! If I got a loan and put the money in my BofA checking account, and then went about paying for....whatever....how would they know? Say I used it to buy a car, or to pay tuition, or buy textbooks, I don't get how they can regulate this.

 

Please clue me in! Smiley Happy


In response to your question, they can't possibly know.

 

The question I have is why do each of these restrictions exist?


Yes! Exactly. Like, HUH?! Why even print those restrictions? They'll never know what you or I do with the loan, so why bother listing those restrictions? I can see if--for legal reasons--they have to state something like "Amex loans cannot be used to hire a hitman" or something like that, but tuition?! Smiley Surprised

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Message 4 of 18
SoCalGardener
Established Contributor

Re: Acceptable and unacceptable uses of personal loans


@Janus wrote:

Did you ACH the finds from Amex to BofA? Then they would be able to find out if they really wanted to know what you were spending it on.

 


Really? I don't see how. Just giving them the right to *deposit* money into a bank account doesn't also give them permission to *monitor* that account. Right?

 


@Janus wrote:

 

My question is, why would they mention paying on Amex Cards when people get loans to pay down CC's all the time? lol

I do understand why you can't BT from one Amex card to another, but using loan funds to pay off a Amex card seems totally reasonable to me.

Vehicle purchase is another odd one, while I wouldn't because APR's are higher on personal loans than auto loans, I'm not sure why they have to include it.  TBH they seem to restrictive to me because once you co-mingle that loan with your other finances there's no proof who's Money went to pay for what


Exactly. *SMH*

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Message 5 of 18
SouthJamaica
Super Contributor

Re: Acceptable and unacceptable uses of personal loans


@SoCalGardener wrote:

@SouthJamaica wrote:

@SoCalGardener wrote:

The other day I logged on to Amex to look for info on personal loans, so I could reply to a question. While I was there, I read something that piqued my interest--and had me scratching my head:

 

==================

What can I not use my loan funds for?

Personal Loans may not be used for post-secondary education expenses, real estate, business, securities, vehicle purchases (other than as down payment for a vehicle), to pay down balances on American Express-issued Cards or any purpose prohibited by law or not otherwise permitted by these terms and conditions or your Loan Agreement.

==================

 

My question is, how would they know WHAT you used it for?! If I got a loan and put the money in my BofA checking account, and then went about paying for....whatever....how would they know? Say I used it to buy a car, or to pay tuition, or buy textbooks, I don't get how they can regulate this.

 

Please clue me in! Smiley Happy


In response to your question, they can't possibly know.

 

The question I have is why do each of these restrictions exist?


Yes! Exactly. Like, HUH?! Why even print those restrictions? They'll never know what you or I do with the loan, so why bother listing those restrictions? I can see if--for legal reasons--they have to state something like "Amex loans cannot be used to hire a hitman" or something like that, but tuition?! Smiley Surprised


I'm sure it's got to do with some federal regulations under which they're operating, but I can't imagine what the rationale is behind them.


Total revolving limits 698000 (605000 reporting) FICO 8: EQ 721 TU 742 EX 715

Message 6 of 18
SoCalGardener
Established Contributor

Re: Acceptable and unacceptable uses of personal loans


@SouthJamaica wrote:


I'm sure it's got to do with some federal regulations under which they're operating, but I can't imagine what the rationale is behind them.


You and me both!

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Message 7 of 18
Yasselife
Frequent Contributor

Re: Acceptable and unacceptable uses of personal loans

@SoCalGardener 

Perhaps it is a way to protect themselves in Court, in case the client does not make the payments and they demand to question the use of the loan. If it is there it is because it has a relevant reason, I would not doubt that there have been cases where people use the loan to buy cars; the credit must have met the requirements at the time of approval but situations can suddenly change for anyone.



Message 8 of 18
SoCalGardener
Established Contributor

Re: Acceptable and unacceptable uses of personal loans


@Yasselife wrote:

@SoCalGardener 

Perhaps it is a way to protect themselves in Court, in case the client does not make the payments and they demand to question the use of the loan. If it is there it is because it has a relevant reason, I would not doubt that there have been cases where people use the loan to buy cars; the credit must have met the requirements at the time of approval but situations can suddenly change for anyone.


Yeah, I see what you're saying, but I disagree for one simple reason: once the money is in my (or your) hands, Amex cannot POSSIBLY know what funds we used to purchase [a car] [tuition] [whatever]. I mean, once the money is in my account, as someone said upthread, it's co-mingled with other money! How can anyone say with certainty, "THAT $X amount came from this loan and was used to buy a car!" They can't. Once it's in my bank account, and mixed with existing and additional funds, no one can say for sure how the money was used. So while the court theory is a good one, I don't think it would ever hold up as there's just no way to prove it.

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Message 9 of 18
FinStar
Moderator

Re: Acceptable and unacceptable uses of personal loans


@SoCalGardener wrote:

@Yasselife wrote:

@SoCalGardener 

Perhaps it is a way to protect themselves in Court, in case the client does not make the payments and they demand to question the use of the loan. If it is there it is because it has a relevant reason, I would not doubt that there have been cases where people use the loan to buy cars; the credit must have met the requirements at the time of approval but situations can suddenly change for anyone.


Yeah, I see what you're saying, but I disagree for one simple reason: once the money is in my (or your) hands, Amex cannot POSSIBLY know what funds we used to purchase [a car] [tuition] [whatever]. I mean, once the money is in my account, as someone said upthread, it's co-mingled with other money! How can anyone say with certainty, "THAT $X amount came from this loan and was used to buy a car!" They can't. Once it's in my bank account, and mixed with existing and additional funds, no one can say for sure how the money was used. So while the court theory is a good one, I don't think it would ever hold up as there's just no way to prove it.


You may be surprised the information they can obtain.  In the ordinary course of business, probably not an issue for most individuals, but they have that legalese clause for a reason. When folks have committed fraud, such as defaulting on credit obligations or filing for BK, they're able to trace how funds were used if transactions or activities are deemed suspect.

You may think "they're commingled with other money...no one can say for sure how the money was used.", they can find out forensically if they obtain a subpoena for any financial records -- if it gets to be an extreme case of defrauding creditors or willful concealment of activities. It has happened.

Also, hopefully you're familiar with EWS, just about every major bank has access to it and they can see pretty much what goes on with your deposit accounts, especially for banks that are part of the EWS consortium. 

Message 10 of 18
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