Can I Get a Loan for Anything? (And other Common Loan Questions)

By Angela Monroe - November 4, 2021

loan qs

We answer some common loan questions to clear up confusion you may have.

Can I get a loan for anything?

No, you can’t. This question refers to a personal loan where, in theory, the loan is for something personal.

However, lenders need to know what the money is for, regardless of the word “personal”. Of course, you can’t use funds to buy anything illegal.

Common reasons for a personal loan include;

  • Holidays
  • Moving costs
  • Car repairs
  • Debt consolidation
  • Life events (weddings, etc)
  • Legal fees (some kinds)
  • Medical expenses (some kinds)
  • Home renovations and repairs / furnishings

In other words, you typically can’t get a loan just for “personal reasons” and have the funds transferred to your bank account to do as you see fit.

Can I buy cryptocurrency with a loan?

btc

It’s possible, but unlikely. To use loan funds for investments, you’ll often need proven professional advice from a financial advisor.

Some lenders may accept loan purposes for cryptocurrency, however, under rare circumstances.

 

  • How about ASX-listed shares?

 

The same applies for stocks and shares. Some lenders may accept loan purposes for investing, however, under rare circumstances. Typically, lenders need evidence that a [potential] borrower has found professional financial advice and understands the risks of investing.

Can I send loan funds overseas?

It’s unlikely and depends on the reason. One example is asset purchases in other countries, for example a vehicle.

Some borrowers look to purchase and import special cars from countries such as Japan, Italy, the US or the UK. This is possible but will require considerable and genuine paperwork.

The reason it’s difficult is that the lender can’t secure a vehicle that’s not registered in Australia and it can be difficult to recuperate funds from overseas.

Sometimes, borrowers go through a vehicle import company in Australia. This means the import company is responsible for importing the vehicle rather than the borrower doing it all themselves.

Can I buy a classic car or a privately imported car with loan funds?

Yes, you can. Assuming you can provide all the necessary paperwork, you can use personal loan funds to buy a classic or privately imported car that is already in Australia.

Some borrowers also use loan funds for restoration work and repairs.

Can I borrow money to help someone I know?

Yes, but it depends on what kind of help and your profile. You’ll need to explain the situation to your broker who will send details to the lender and assessment teams.

Assuming the person in need of help is in Australia with the correct status, they might be better off applying for a loan themselves.

Can I use loan funds to buy things online?

onlineshopping

Yes, you can. For example, furniture, appliances or even cars. Typically, you’ll need to make the purchase from a reputable company or from a seller located in Australia, for example on GumTree.

Can I use loan funds to start a business?

This is a commercial (business) loan, not a personal loan. It’s possible to do, however, you’ll need to speak with a commercial loan officer.

Typically, applicants for this kind of loan need industry experience and to show their ability to generate an income from the business they plan to start.

Can I use loan funds to pay off an existing debt?

Yes, you can. This is called debt consolidation and it’s a common reason for taking out a loan. 

Borrowers often choose this option because a new loan will offer benefits over their existing loan, for example, lower interest rates and / or lower scheduled repayments.

If the debt is to a private person, for example you’ve borrowed money from a family member, it can sometimes be arranged, assuming the lender has all the details.

Find out more

People require and request finance for a huge number of reasons. Some recent standouts include;

  • Building a houseboat to live on
  • Rebuilding a high performance vehicle
  • Refurbishing an investment property
  • A professional BBQ for a residential home

If you’ve got plans and aspirations that require funding, chances are that there’s an option – or options.

To get moving, talk to a broker as they’ll be able to offer some ideas, point you in the right direction and let you know where you should be in order to make it happen.

Note that formally applying for a loan directly to a lender, like a bank, can put enquiries on your credit file which, in some cases, means a lower credit score. That means less chance of approval in the future.

***The above information is a guide only. Each loan applicant has different circumstances and each application is assessed based on the applicant’s situation. Finance decisions are dependent on the applicant’s profile and details.

Angela Monroe
Angela Monroe is the Community Manager at The Positive Group, specialising in giving people the information that they need when they need it, and putting you on the path to a fair financial future. She has 8 years of experience in helping Australians find the right finance solutions, and regularly contributes articles to empower Australians with the knowledge they need to become financially healthy.

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