A loan product presented as a “loan without income” pretends that lenders do not need to submit income. However, this is in contradiction with the new Consumer Law, which states that non-bank corporations, even for short-term loans, have to assess the client’s monthly income and expenses, thereby discovering their ability to repay liabilities. Despite this, we can run into loans without income on the credit market. In what conditions?
When is it necessary to prove income?
Loans without proof of income are often hidden under this label. This does not mean, however, that non-bank companies do not want to know the regular income of the loan applicant. Although it is not necessary to prove this in the form of a confirmation from the employer, the companies require at least one to three statements of the current account or consent to access the internet banking.
On the other hand, when do we not receive income?
If someone does not have sufficient income but needs a high loan, the solution may be loans with property pledge, such as an apartment, house or commercial property. It is possible to guarantee real estate belonging to the applicant or another guarantor. Real estate is a guarantee for the lender that the client will meet its obligations and, in the event of default, the lender will repay the debt on the property sold.
Imposing collateral on property
The pledged property is subject to a lien recorded in the Land Register. This makes it impossible for the debtor to sell the pledged property without the creditor’s consent. If the borrower stops repaying the loan, the lender can sell the property at a public auction, but often does not get the necessary amount to settle the debts and the borrower is obliged to repay the residual debt. If the lender receives more than the amount of the debt for the property, he must pay the overpayment to the borrower.
In particular, non-banking companies require collateral
Banks demand mortgages for mortgages or very high loans, which could not be obtained without income assessment. Non-bank companies may require a lien on the property even for tens of thousands of sums. It’s something for something – the client stops the property and does not have to prove his income and not be afraid to look into the debtors register. This option will be appreciated by people who have been late in repayments or have other active loans.
Consolidation or refinancing of old loans
A loan with no proof of income with property pledge can be used for anything, including consolidating more liabilities or refinancing one commitment. Thanks to property collateral it is possible to get more favorable interest than with classic non-bank consumer loans, but sometimes higher than with bank consumer loans. Therefore, the profitability of these loans is questionable.
Loan Terms and Conditions
If we still talk about loans without income with property pledge, each company has individual lending conditions. But they can have this in common:
- Do not pay any fees in advance
- The repayment period can usually be selected from 10 to 20 years
- He is liable to his or her third property
- The guarantor is not a condition
- The income may not be proven
- The records in the registers are not an obstacle
- Money can be used for anything
- The loan can be repaid at any time