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Written by
Kellye Guinan
Edited by
Rhys Subitch
Rhys Subitch is a Bankrate editor who leads an editorial team dedicated to developing educational content about personal loans products for every part of life.
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Lying on a loan application may seem harmless, but even if a lender does not verify every piece of information, it is still considered fraud. While it can be tempting to misrepresent your income, employment or assets to seem more appealing to lenders, you could face serious consequences.
Not only can you lose your loan funds, which means you never see them or have to repay what you borrowed immediately, you can also face serious legal consequences. Always be honest when you apply for a personal loan — or any form of credit — and update the lender as soon as possible if there are any changes to your employment or income.
Knowingly providing false information on a loan application is considered fraud and is a crime. For instance, putting an incorrect salary or falsifying documents would qualify as lying — and can impact you in serious ways.
You could lose your loan. The company may cancel the loan, and if it doesn’t cancel it, you may have to immediately repay any loan funds you’ve received if the lender learns that you’ve misrepresented yourself.
Your credit score and ability to take out loans in the future may also be impacted. Even if you don’t get caught, you are still causing harm to yourself. You could get stuck with a huge debt that you cannot repay. Missing payments will lead to a lower credit score and default. It won’t take long for that debt to affect other areas of your life, like your ability to work and maintain a stable home.
Going to prison for lying on an application is rare, but it does happen. There have been many cases of people being sentenced to prison for providing false information to lenders. These typically follow larger criminal acts — like identity theft — but you are still putting yourself at risk of jail time.
Even if you are not sentenced to time in prison, you will still face consequences. Fines and legal fees will be added to immediate repayment of whatever funds you borrowed.
To get a personal loan, you will need to provide a variety of information. Lenders may choose to verify anything you submit, including:
Your application and any supporting documentation will be checked for inconsistencies and inaccuracies. Some application forms also detect if a document has been altered, modified or edited.
Your income, debt, employment and other information need to be accurate when you submit a personal loan application. Any exaggeration can be considered fraud.
Honesty is the best option when applying for a personal loan. Beyond the potential criminal charges, it helps ensure you only borrow what you are capable of repaying. Lenders have these policies in place to prevent you from overextending your finances.
There are a few things you can do to strengthen your loan application — even if that means delaying things until you are in a better position.
If these aren’t accessible, you may want to consider a personal loan alternative. There are bad credit loans as well as credit cards that may be easier to qualify for. And while these may not have the best terms, they can bridge gaps in your budget while you work on strengthening your overall financial situation.
