It can matter. If you have a high amount of debt, it could be easier to get a loan for a vacation versus debt consolidation because the lender is worried you'll pay off the debt then run it up again while now also having the loan.
@Anonymous wrote:
@Brian_Earl_Spilner wrote:It can matter. If you have a high amount of debt, it could be easier to get a loan for a vacation versus debt consolidation because the lender is worried you'll pay off the debt then run it up again while now also having the loan.
What if I put "vacation" and use it to consolidate debt?
Well, I doubt a lender will approve a 20k vacation loan, but you could always try.
@Anonymous wrote:When applying for a personal loan, most lenders ask the borrower to choose a purpose which can include "big purchase" "vacation" "consolidate debt" "medical" or "other". Lenders may also explicitly prohibit certain uses such as education, gambling, etc.
How important is purpose for loan approval, and which categories are most likely to be approved?
I see no reason to think that one specific purpose cited for a loan request would be more advantageous than another. I do think the question is an entree into establishing how well thought out the request is, and whether the loan amount is appropriate for that purpose.
Establishing that you have the resources from which to fund repayment, and credibility that it's strongly likely that you'll repay the loan as promised is the key foundation for loan approval. Beyond this, a lender wants a sense that the basis for the request is well-formulated and that resonable consideration has been given to the repayment requirements. Perhaps, most important is to ensure is that the request isn't a flight of fancy or frivilous request. Asking about purpose is a cursory means by which to gain limited insight into these concerns, which can be followed up with direct questioning if anything about the application is marginal.
