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  • Category: Banking

    Need a clarification of providing money for land

    Confused of diverting personal loan drawn for marriage purpose to purchase of land. Go through the suggestion of our experts about the legal aspects involved in it.

    I have borrowed some more than 10 lakhs amount from source of personal loan. Now we are in a situation to buy a land which actually was borrowed for marriage.

    Is it legal to use personal loan to buy a land?

    Is there any trouble in withdraw or transfer(netbanking) of above 10L to other account in a week?
  • Answers

    3 Answers found.
  • What I feel that once the money is borrowed , the company is not concerned about where are you going to invest and what you will do with the money. Personal loan is expressly given in cash or credit to the account by the loan provided company and the company does not ask for proof as to what you have done with the money. It all depends on your repaying capacity which is most important. As long as you have the repaying capacity to loan company, the would not interfere and in fact sanction further loans on seeing your commitment and sincerity in repaying loan and interest,.

    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • I don't foresee any problem in this dealing. Once the loan amount is in your account and that to loan is a personal loan, you need not bother about usage. But whatever amount you are paying for land make it officially only by bank transfer or A/C payee DD etc. Don't draw cash and give him. You decide on your priorities. But as far as I am concerned I am against purchasing land with personal loan amount where the percentage of interest is very high.

    always confident

  • Many loans fail to be repaid properly and promptly because of diversion; i.e using it for purposes other than for which it is borrowed.

    Earlier days banks used to lend only for productive purposes and buying assets other than land. Personal loans were given for buying appliances and assets use for daily convenience. But the bill and receipt for having purchased them were insisted upon to ensure that the money borrowed was used for the intended purpose. Even physical inspections were carried out.

    But later on banks started giving loan s for even social spending and personal consumption. No questions were asked as to what purpose it is used for. Todays' personal loans are thus purely 'for personal consumption purposes'.

    So in this case in the above question, even if it was for marriage purpose, bank may not ask for any proof of spending. Once the lending bank sends the money to your bank account the loan is given and you are bound to repay as per agreement.
    But in your case I guess it may not be bank loan, but sourced from non-banking sources.

    In any case, if you feel it is okay to use the money for some other legally allowed purpose, then it is your responsibility. But you should not default the scheduled repayment.

    If the money is borrowed legally then there is no problem transferring it via banking channels paying the required charges and identification like PAN no. Aadhaar card etc. Non cash transactions properly routed through banks are now welcome and encouraged.

    Now the practical and ethical question.
    If you buy land with the borrowed money, how will you conduct the marriage? Will it not cause disappointment to the person(s) concerned? The priority is to be decided by you only. Have you a real repayment capacity meeting both marriage and land buy? Work out and decide.

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