I'd be very careful how you handle this private loan situation.
I don't know what kind of relationship you have with this relative, and how much they understand about the way your DP treats you, but this could easily cause a rift that cannot be repaired. It could also go beyond that one relative, with sides being taken. And tbh, it sounds like you need family support, with the kind of partner you have.
People can hold you responsible for choosing to let your partner spend the money in a way it wasn't intended, and could assume you also want to take the piss, as if you didn't, you'd have stopped it from happening.
I hope you've told your relative how your partner is planning to misuse the money. It would be very wrong to just stand by and let this man take the money under false pretenses. To let him disrespect your relative just like he disrespects you.
It doesn't sound like you have any control over him, so telling the relative is the best option ethically, and also practically, to stop him alienating a source of support and driving you into more debt.
I had an abusiveness partner and lost close friends because of it. They weren't in this abusive relationship with me, and yet I exposed them to my partners bad behavior, the lying, money 'borrowing', unreliability, and the basic lack of respect, and the anger. And as I let the situation continue, although I was repaying the money he 'borrowed', apologizing for his bad behavior etc etc, but, at the basic level, by continuing to be with him, I was letting him treat my closest friends like shit. So eventually, after a long time, they left me to it, me and my shitty relationship.