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Can I Really Spend My Loan on Anything?

Borrowing money can be a great resource for several reasons for many kinds of borrowers. Students may use them to get through school, businesses can use them to purchase essential investments, and those in real estate could use a loan from hard money lenders in Florida to flip property. There are endless possibilities and loopholes on what you can do with loans, but does that mean you can spend it on just anything?

It all depends on the terms of your loan. Certain agreements may only allow the loan to be used for certain situations. If you have in your contract that you must only use the loan for an authorized expense, then choosing to spend it on something outside of your contract is a huge risk. You may be considered to have breached your contract – legal action typically occurs following a breach of contract. You may be required to pay the original amount of the loan plus legal fees. If you cannot pay back the loan, the lender could liquidate property and assets to make up for it. 

The bottom line: your best bet is the stick closely to the terms of your agreement. 

What you can purchase with your loan also depends on the type of loan. If you take out a business loan, the loan should only be used for business purposes. If you take out an auto loan, stick to automobiles. However, personal loans may have more grey areas. Many personal loans can be used for nearly anything, but it depends on the lender. Before taking out a loan, make sure you explicitly understand the terms of your agreement to avoid any hassle or legal trouble in the future. 

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