The real consequences of lying on your loan application
It is tempting to embellish your finances when you apply for a credit card or a home loan or a car loan.
Have you lied to secure credit? If you have, you are not alone. Millions of Australians are being untruthful to save a buck, according to new research by finder.com.au.
One in 10 Australians admitted to lying when applying to get a loan. Finder estimates that more than $220 billion in finance could have been applied for under false pretences.
Finder's survey of 2010 people found that 4% lied on a credit card application. The research house estimates that with roughly 16.1 million cards in circulation, some 600,000 may have been acquired using false information.
But if you are tempted to exaggerate your financial position, it really isn't a good idea.
Bessie Hassan, money expert at finder.com.au, says if the false information results in you gaining access to credit you would not otherwise be able to obtain then there could be serious consequences.
"It might mean you are more likely to default and depending on the fine print you could even face prosecution," she says.
"Giving false information whether that's exaggerating the value of your assets or employment status to underestimating expenses - is fraud."
The research also found that 1.3 million Australian have committed insurance fraud.
Australians are most likely to bend the truth on car insurance, with 561,000 lying on applications, followed by health insurance (486,000) and life insurance (205,000).
Hassan says honesty is the best policy when it comes to insurance as well.
"Even if telling the truth could increase premiums, it's worth being upfront as the alternative could have serious consequences.
"Insurance fraud is illegal, so it goes without saying that dishonest claims will be denied. Insurance brands have claims investigators so it's likely they'll find out if you've lied," she says.
Baby Boomers are honest compared to Generation Y with only 1% of baby boomers saying they lied while Gen Y is more than 10 times likely to lie (17%) on an application.
"The best legal way to reduce your premiums is to compare your options online. Whether it's pre-existing conditions, no-claim bonuses or even your age, lying isn't worth the rejected claim if something does go wrong," says Hassan.
"Be upfront because even if you are a long standing customer, questions will be asked about what you put on your application."
Have you ever lied on a credit/debt application? (Multiple selections were allowed)
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