Over the years, almost 32 of them to be exact, in the personal finance world, you can imagine I have heard it all, from how people found themselves in debt, to why they may need a loan, and some funny tales as well.
However, there is one question that has popped up time and time again over the years, and that relates to fraud, loan fraud, and not in the sense you may initially be thinking.
Fraud is such a negative word, and brings up images of someone lying, or totally misrepresenting themselves.
And there are degrees of fraud, things many of us do, not intentionally committing fraud, but it is fraud just the same, especially with car insurance.
We may say we are the main driver of a car to save our children on their insurance, when they really are the main driver.
We may use a different address as to where we live to reduce our car insurance.
Small white lies, but fraud just the same. Especially if we have an accident and the insurer reviews and re-underwrites the policy.
The same can be had or done when applying for a loan.
Some Little White Loan Application Lies
There are a few “little white lies” that people may say or make when completing an application for a loan, however, some of these can be put down to a bad memory, or just not realising how important some information is in being approved for a loan.
But if we were to look at two (2) of the biggest omissions or “lies”, it would be in the income and expenditure department.
When you look at and consider what a lender is basing giving us a loan, there are a few factors:
* Credit history and credit score
* Everything else
So what is number one (1) even over credit scores, especially for bad credit loans……our survey said…..affordability!
Even for guarantor loans, the basic foundation of the loan besides having a guarantor is affordability.
As a borrower, you need to be able to show you can afford to repay the loan. And how is his done, usually through a detailed income and expenditure form.
And this is where the little white lies usually come into play.
Omitting an expense or bill, which makes your income seem to go further and that you have a larger surplus of income to repay the loan.
Increasing one’s income, to state you earn more than you actually do earn.
Naturally, is a lender asks for documentation of your income and expenses, it is difficult to “fudge” these, but with online applications, 24 hour approvals, and quick turnarounds, and competition in the lending world, these figures may no always be double checked.
So there you are, completing a loan application, and instead of putting down you earn £20,000 a year, you state you earn £25,000 a year. Where’s the harm???
Fast forward a year and you find yourself out of work, or for whatever reason you cannot repay the loan, and you are worried if you will be done for fraud.
Technically you did fraud the bank/lender, but also you think….should they have not asked for proof or documentation….this to ease your guilty conscious.
The fact is both are true.
You did give a little white lie on the application regarding your income, and the lender should have done due diligence to confirm what you stated.
So the question we have heard over the years is, “will I get charged with fraud?”.
The answer is no, probably not.
Is this a licence to put down a higher income or misrepresent yourself on a loan application….absolutely not!
But you are not going to be charged with fraud.
There are examples and cases where a person can be charged with fraud, but the everyday person such as ourselves, it is not going to happen.
The bottom line is that the majority of us are as truthful as we can be on a loan application, and fraud is a harsh and severe word, which usually means there was intent. Making a mistake is not intent.