Whoever is faithful in what is small is also trustworthy in great things, said the most excellent teacher who ever lived. We are living in an era where faithfulness is critical. There are cases where individuals lie and get away with it. But should that always be the case? Not at all! Being truthful is a good thing always. No wonder they say the truth can set people free. When it comes to borrowing funds, it is vital to be truthful, especially when applying for a loan. In this discussion, we are going to see what happens when applicants lie about their income on loans.
The Need to Be Truthful While Applying for a Loan
Lenders are in business, and they too need to make profits, just like other business people. But profit-making can be impossible if they approve each and every loan request they receive. Therefore, applicants are always screened before being approved for a loan, especially when they borrow money online.
There are several eligibility tests that applicants are expected to pass before their loan requests are granted. For instance, lenders often examine borrowers’ credit scores to determine their creditworthiness. It is impossible to lie about credit score because the information is always collected from different sources and computed by an independent party. Many lenders use credit score as a primary eligibility test for loan approvals. Additionally, lenders also look at the borrowers’ credit utilization as well as their debt to income ratio. While the cases of cheating are rare, it is possible to present the wrong information.
Proof of income is yet another significant thing that lenders examine before deciding to approve or decline a loan application. But unlike the credit score, the borrower is the primary source of this information. Lenders primarily depend on this information to determine the amount a borrower can comfortably manage – go to this website if you want to find out about the rate. Lenders need to lend only to individuals who can pay the principal amount as well as the interest within the agreed timeframe to profit. The best way for them to determine the borrower’s ability to manage additional financial obligations is to examine the income earned, as well as the available amount.
So why do you need to be truthful while applying for a loan? For several reasons. For instance, by being truthful, the lender can easily determine the amount of loan that you qualify for. You do not want to obtain a substantial loan that is more than what you can practically afford. Also, borrowing money comes with an obligation to repay the loan amount as well as interest in it. Why should you incur the costs that you can possibly avoid by being honest?
Moreover, all that you would like others to do to you do the same to them. Imagine that awkward feeling when you discover a lender lied to you about the terms of the loan, or the fees charged? I know it is a bad feeling. Think of it, appreciate the value of being truthful. In other words, it is vital to be truthful because courtesy demands that. It is good for you as well as it is for the lender.
What happens when you lie?
It is extremely difficult to lie about income and get away with it. Indeed, sometimes the information may not be tested, and lying is wholly discouraged. A lie is considered a crime and might attract grave legal consequences. It might also become extremely difficult for you to qualify for other loans, even for many years to come.
If you intentionally provide a lender with false information during the loan application, it is considered to be lying. In Singapore, lying amounts to a crime and can attract several undesirable consequences. This may include providing fake documents. What are the likely consequences in case you are found guilty?
You risk going to prison. Well, it might appear unrealistic, but it actually happens. In the past, a woman was sentenced to five years in prison for providing false details on her income and property to be approved for a personal loan. While she had no difficulties repaying the loan, the prosecutor was able to convince the court that crime was committed through lying, which led to the financing of a home worth $ 1.8 million. Let us take another example from abroad. In the US, the state of Ohio, a lady, was guilty of using someone else’s identity to secure a loan from a lending club. Sadly, she was imprisoned for 14 years.
While you may not have a criminal intention, lying limits the chances of securing a loan. In Singapore, most of the applications are declined due to insufficient income details or information about employment. There are cases when lenders have called for immediate repayment after discovering that the borrower lied or the information was misinterpreted.
Apart from legal consequences, there are further consequences that you may suffer as a result of lying about your income. For instance, your credit rating may significantly drop. This means you may not be eligible to qualify for other loans henceforth. It usually takes longer to build a credit score. But again, it can only take hours to destroy it by lying.
Also, as you lie about income on loan, it might appear beneficial to you. But in reality, who is cheating whom? You might be granted a loan you do not qualify for. But you may struggle a lot to repay the loan. Your credit score can dip as well for failing to keep up with payments.
The Bottom Line
In light of the above, the outcome of lying on loan can be so devastating and significantly surpass the rewards you may gain. There are different things you can do rather than providing false details and qualify for a bigger loan. For instance, different lenders have different terms, and it is possible to find a lender who grants you a large loan based on your prevailing financial condition. So, aim to be truthful, and you will avoid a lot of problems.