Loan without income – a reality or an advertising trick?
Have you come across a loan without income, but the loan provider wanted you to have the same bank statement anyway? Under the new Consumer Act, non-bank corporations need to identify your current income and determine your creditworthiness for short-term loans. Nevertheless, there are loans where you do not need to actually prove income.
Loans without income = loans without proof of income?
Current non-income loans are de facto loans without evidence of income. They work on the principle that you do not have to submit a receipt for income from your employer, but require “only” the last three statements of your current account where you receive your income. Some companies have a technology that, with your permission, will take a look at your internet banking and immediately discover your income and expenses.
Loans without income with property pledge
As we have already mentioned in the introduction, loans without income actually exist, but they are secured by a pledge of an apartment, house or other property. These loans are appropriate if you own a property, need a high amount and do not have sufficient income. In this case, the property is used to cover the risk and it is a property pledge, sometimes referred to as a non-income loan.
Why do companies require property collateral?
The pledged property serves as a guarantee that the creditor will repay the deposited funds. If you stop repaying the loan, the lender can sell your property and redeem it. The property may be owned or held by a guarantor. The pledge of the property is entered into the Land Registry and a lien will be imposed on it. This makes the creditors confident that the debtor does not sell the property without their knowledge.
What happens in case of debt defaults?
If the property is sold at a higher price than the current debt, the debtor will receive an overpayment from the creditor. However, the practice is that real estate is sold below the price of public auctions and sometimes the property sold is not enough to obliterate the debt. Thus, the debtor may remain a residual debt.
Non-bank companies often require collateral
While banks are demanding collateral for real highs in hundreds of thousands to millions, non-bank companies demand it for tens of thousands if you are unable to prove sufficient income or want a loan without a debtor register. This can be used by people who have had repayment difficulties or other loans in the past.
Loans without income to pay old liabilities
Loans without income, or mortgaged loans, can also be used by consumers to consolidate existing loans that fail to repay and disproportionately burden their family budget. Interest on non-banking companies is the same throughout the loan repayment period, but is usually comparable to consumer credit.
Pledged loans have moderate conditions
Any non-bank lending company with no income can have different conditions for obtaining a loan, but usually:
- The repayment period can be spread over 10 to 20 years
- The Company does not view the BRKI, NRKI and SOLUS credit registers
- The Company does not require proof of income
- The company does not require a guarantor
- It is possible to guarantee third party properties
- The loan can be used for anything
- The loan can be repaid early
- No prepayment fees apply
- A bill of exchange is not signed