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The phrase "illegal loan" is correct and usable in written English.
It usually refers to a loan that is obtained in a way that is not allowed by law. For example: "The bank refused to approve the loan because it was an illegal loan obtained without proper documentation."
Exact(38)
He accused Mr. Clinton of pressuring him to make an illegal loan, not of accepting an illegal loan.
High cost lenders will face a new levy to fund a crackdown on illegal loan sharks, the Chancellor has announced.
The last resort is illegal loan sharks.With such high rates, it isn't surprising that debts often spiral out of control.
Another important proposed change would give borrowers the right to modify an illegal loan, before they're forced into foreclosure.
"That could shut down short-term loans and force people towards illegal loan sharks or other extreme measures," she said.
In fact, Enron's only requirement, Mr. Blumenthal said, was to repay the "illegal loan" from the authority.
Similar(22)
The regulator, Benjamin M. Lawsky, ordered the lenders to halt the "illegal" loans within two weeks.
Over all, Mr. Mackey reported only $638 million in illegal loans held by the government.
In 1997 the Daiichi Kangyo Bank, absorbed by Mizuho in 2000, was found guilty of extending illegal loans to a "sokaiya" racketeer.
An unwelcome echo of that time was the recent conviction of two former directors of Anglo Irish Bank for providing illegal loans to purchasers of its own shares.
Mr. Lawsky urged the banks to "work with us to create a new set of model safeguards and procedures" that will detect illegal loans.
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com