1. Risk control: auction deposit is a kind of deposit for participating in auction activities, which is used to ensure the sincerity of bidders and the seriousness of their participation. The borrower pays the auction deposit with the loan. Once the auction fails or the loan cannot be returned on time, the deposit cannot be returned, which increases the risks of borrowers and lending institutions.
2. Restrictions on the use of funds: the loan has specific restrictions on its use, and the loan contract will clearly stipulate the scope in which the borrower can use the loan. The loan contract explicitly prohibits the loan from being used to pay the auction deposit, and the borrower will face the risk of default if it defaults.