Image: Franz Aberham - Getty
Heard the one about the man who asked his bank for a loan to buy a Bengal tiger? No it's not a joke, it's evidence of the weird world of personal loans.
While it's getting a lot harder - and decidedly more expensive - to borrow money from the banks, a decade or more of easy borrowing has given rise to a litany of weird, wacky and downright bizarre requests for personal loans.
Most people apply for a personal loan to buy a car, or a new kitchen, the cash to double glaze their windows, or possibly to fund a once-in-a-lifetime trip around the world, but that's not all they want it for.
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From frozen assets to football dates
There are plenty of far stranger loan requests. These include one from an applicant who wanted the cash to get on the waiting list to have their body cryogenically frozen after their death.
Another allegedly asked for money for ingredients to bake the world's biggest cake. One borrower asked for £3,000 to buy a British bulldog, while another wanted money to build a robot. And that's not as wacky as they get.
On a list of unusual personal loan requests from Lloyds TSB is the case of one applicant who needed money to pay for someone to remove a rat's nest from his motorbike engine, another applied for cash to buy a dress belonging to the Spice Girls, while another wanted the readies to make an online bid to date a famous footballer.
And they're just the ones telling the truth. Lenders suspect that many of the tens of thousands who apply for cash for a "new car", a "new kitchen" or "turf for the garden" are probably putting the cash to more imaginative uses.
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A nose for a deal
One 18-year-old single mum applied for the money for a nose job, and got it. She had no savings and was living on state benefits, but the bank gave her £5,000 rather than the £4,000 she initially asked for, all because a five-year £5,000 loan at 10.8% was cheaper than a £4,000 loan at more than 15%.
She paid £3,600 for the operation at a local private clinic, and spent the remaining £1,400 on hair extensions, Christmas presents and making the monthly repayments. When the cash finally ran out and she stopped paying, the bank loaned her a further £1,000. She now owes a total of £10,320 and has no hope of repaying it any time soon.
Irresponsible lending on the part of the bank it may be, and you could argue that the borrower was also silly, but it's not a one-off case. One couple who earned just £5,000 a year between them, were lent a whopping £100,000, with few questions asked, or so it would seem.
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Of course, these are all examples of borrowing before the credit crunch bit and recession struck. Today, if you too harbour plans to ask your bank to lend you the money to fund a trip to Disney Land to meet Mickey Mouse, like one 40-year-old man did, or to get your teeth fixed before your wedding, you'll need to be able to prove that you're credit-worthy and able to make the repayments.
The number of people being turned down for personal loans has soared as the era of easy loans has come to an abrupt end. Nearly half of all those applying for loans are turned down. And if you're not viewed as a low-risk borrower you can kiss goodbye to hopes of a low-rate loan, as lenders have tripled their rates for high-risk customers.
But, many of us do need to borrow money from time to time, so if you find yourself in that position keep these pointers in mind and you're less likely to saddle yourself with an unnecessary debt you'll struggle to repay.
1. Don't borrow more than you need to
While adding a few extra quid to the sum you're borrowing may seem like a good idea at the time, it's a dangerous game to play. Stick to only borrowing what you absolutely need to.
2. Pay it off as quickly as you can
The sooner you repay the sum the quicker you'll be out of debt and the less you'll pay in interest. So opt for the shortest term you can afford. But beware paying off early, as charges often apply.
3. Think twice before taking a secured loan
Default on repayments on a personal loan and you could find bailiffs on your doorstep and a black mark on your credit rating, but do the same with a loan secured on your home and you could end up without it. So think twice, and ensure you won't default on repayments, before betting your house on it.
4. Read the small-print before taking insurance on your loan
While your lender will say it's important to ensure you can make repayments should you lose your job or become unable to work, there are many people who will find they're not eligible to claim even if they do find themselves in that unfortunate position.
If you're self-employed, a contract worker or even employed in an industry in which redundancies are high, you could find you're wasting money you could put to better use elsewhere.
5. Shop around for a good rate, but apply only once
When you apply for a loan you'll be subjected to a credit search. This shows up on your credit file, and regardless of whether you take up any subsequent offer or not, other lenders may view you with suspicion if you appear to have sought credit from a number of lenders.So do your homework on borrowing rates, but don't do anything further until you're sure you want to borrow the cash for real.And above all else, remember the words of investment guru Warren Buffett. He said: "There's no way a smart person can go broke, except through borrowed money. All borrowed money may do is help you get rich a little faster. But the thing to remember is that it can help you get poorer a whole lot faster still."
