Amex Personal Loan uses?

[Floyduda]

In their terms and conditions, Amex says that you can't use their loans to purchase a vehicle or real estate. Can anyone explain to me how they would know what you are using it for?  If you borrow 10K from them and then you take 15K from your savings to buy a car for 25K, how would they know?

[CreditInspired]

Once the card is swiped, it’s probably the way the transaction is coded.

EDIT: Oops, you said personal loan. Hmmm, not sure. But, why would someone take this approach since a secured loan interest is way lower than AmX unsecured personal loan.

[Floyduda]

Fair question.....Let's take the case for real estate. Person A wants to sell a small condo to person B. The asking price is 30K. Person B has 25K in savings and wants to take out a personal loan for 5K and make the cash purchase for 30K. I'm not aware of any bank offering a mortgage for 30K.....I can understand why Amex wouldn't want you to enter into another installment type of loan after you borrowed money from them. Obviously, it could jeopardize your ability to pay them back. In the above scenario, I don't see why it should matter.  

[Anonymous]

Thats essentially it, they don't want you entering into too many installment loans hampering your ability to pay them back. 

Though if you took out a $10K loan and bought a car for $8K, I don't see any harm there. ohter than the higher APR for an unsecured loan.

[iv]

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@Floyduda wrote:

In their terms and conditions, Amex says that you can't use their loans to purchase a vehicle or real estate. Can anyone explain to me how they would know what you are using it for?  If you borrow 10K from them and then you take 15K from your savings to buy a car for 25K, how would they know?

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How would they know? They wouldn't.  And they don't really care, either.

But there are rules around certain types of lending (specfic disclosures for real estate, for instance), and Amex is covering themselves here by explicitly stating that this is not a loan of those types.

In this case, it's not that you'd be in trouble for using it for those purposes, but that THEY would be in trouble for not providing the proper paperwork, disclosures, right of rescission period, etc... if they offered the loan for those purposes.

With the disclaimer, though, if you tried to exercise any rights you might have under federal or state law as it relates to auto or real estate loans, against Amex for one of these loans, they'd be able to get you laughed out of court.

(Still, you'd usually get a better rate for a secured loan on a car than for an unsecured personal loan anyway... so usually doing this wouldn't make much sense.)

EDIT: Yes, doing this for a sub-50k real estate deal could make sense in some fairly limited cases... but actual cash would still be a better idea.

[Floyduda]

Thanks, I appreciate your response. This might be one of those "fairly limited cases."   It is for sub 50K real estate....I don't have all the cash and would like to bridge that gap with a personal loan before I lost out on the opportunity. I don't have a lot of experience with personal loans so I was just throwing this question out there in order to understand it all a little better....thank you.

[Anonymous]

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@Floyduda wrote:

In their terms and conditions, Amex says that you can't use their loans to purchase a vehicle or real estate. Can anyone explain to me how they would know what you are using it for?  If you borrow 10K from them and then you take 15K from your savings to buy a car for 25K, how would they know?

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I have a personal loan with Amex.  They will deposit the fund to whatever bank account you setup with.   There can be a lot of legal terms, but, regarding how you spend, once it is sent to your account, I think only you know how you used avilable monies.