No Income No Asset Loans

Author: Ryann Cairns

There are a growing number of lenders in the banking industry who are targeting and focusing on the non-traditional borrower. One of the products targeted to this market is the no income and no asset loan.

While most lenders require extensive verification of all income reported by the loan applicant, as well as requiring the use of certain assets as collateral, these special lenders are willing to lend money to borrowers who are unable to prove their income in a traditional manner. For those without traditional employment, finding a loan can be a difficult process.

While most applicants can provide pay stubs, income tax returns and other verification to prove their stated income, those employees who work odd jobs, temporary jobs or other non-traditional employment situations are often unable to provide this type of income verification. It is these consumers to whom the no income no asset loans are targeted.

Of course, the convenience of not having to prove income or use assets as collateral does come with a price tag attached. With these types of loans, that price is generally a higher interest rate than traditional loans. The annual percentage rates on these loans are generally much higher than the annual percentage rate to be found on a traditional loan. It is therefore very important for any prospective borrower to fully understand all terms and conditions of the no income no asset loan before they sign any loan paperwork.

These non-traditional loans often carry very high fees for late payments and other typical payment issues. The lender is also required by law to reveal the annual percentage rate, but this interest rate disclosure is often found buried in the fine print. If the borrower cannot find the annual percentage rate, it is vital to ask the lender for the information.

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