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> while you can pay off debts by taking on other debts, there is a good reason why this is illegal Loan consolidation is quite normal in the UK
by isostatic 7y ago
> while you can pay off debts by taking on other debts, there is a good reason why this is illegal
Loan consolidation is quite normal in the UK
- ThePadawan 7y agoSorry, I was mentally adding "without the consent of both parties". Because otherwise, what would stop you taking on a loan for X, then paying it off after a while by taking on the same amount from another bank?
- pbowyer 7y ago> Because otherwise, what would stop you taking on a loan for X, then paying it off after a while by taking on the same amount from another bank? Nothing. That's why lenders do credit checks and due diligence.
- lazyasciiart 7y agoAbsolutely nothing stops you. The bank you owe money to has no rights whatsoever to control where the payoff money comes from. https://www.moneycrashers.com/responsible-use-0-balance-transfer-credit-cards-debt/ https://www.moneycrashers.com/responsible-use-0-balance-tran...
- dredmorbius 7y agoThe bank lending the money may we'll care where it's going. A bank's primary business is managing risk. And borrowing from Peter to pay Paul (having previously borrowed from Paul) is a significantly different risk profile than borrowing for investment or even present consumption.
- jeremyjh 7y agoIn business/commercial lending the purpose of the loan is typically a part of the contract. You can’t say you will use the money to buy equipment and then use it to pay off another debt. Also you will have to provide regular (yearly/quarterly) financial statements (typically audited) that include a balance sheet that would list all outstanding debts and assets. As long as you abide by all your existing and future loan covenants you certainly can use loans to pay off debt and many people do. When you can’t it’s due to contracts, not “laws”.