What Is a NINJA Loan?
A NINJA loan is a slang term for a loan extended to a borrower with little or no attempt by the lender to verify the applicant's ability to repay. It stands for "no income, no job, and no assets." Whereas most lenders require loan applicants to provide evidence of a stable stream of income or sufficient collateral, a NINJA loan ignores that verification process.
NINJA loans were more common prior to the 2008 financial crisis. In the aftermath of the crisis, the U.S. government issued new regulations to improve standard lending practices across the credit market, which included tightening the requirements for granting loans. At this point, NINJA loans are rare, if not extinct.
Key Takeaways:
- A NINJA (no income, no job, and no assets) loan is a term describing a loan extended to a borrower who may have no ability to repay the loan.
- A NINJA loan is extended with no verification of a borrower's assets.
- NINJA loans largely disappeared after the U.S. government issued new regulations to improve standard lending practices after the 2008 financial crisis.
- Some NINJA loans offer attractive low interest rates that increase over time.
- They were popular because they could be obtained quickly and without the borrower having to provide documentation.
How a NINJA Loan Works
Financial institutions that offered NINJA loans base their decision on a borrower’s credit score with no verification of income or assets, such as through income tax returns, pay stubs, or bank and brokerage statements. Borrowers must have a credit score over a certain threshold to qualify. Since NINJA loans are generally provided through subprime lenders, however, their credit score requirements may be lower than those of mainstream lenders, such as major banks.
NINJA loans are structured with varying terms. Some may offer an attractively low initial interest rate that increases over time. Borrowers are required to repay the debt according to a scheduled time frame. Failing to make those payments can cause the lender to take legal action to collect the debt, resulting in a drop in the borrower's credit score and ability to obtain other loans in the future.
Risks of NINJA Loans
Because NINJA loans require so little paperwork compared to, for example, traditional home mortgages or business loans, an application is processed quickly. Their speedy delivery makes them appealing to some borrowers, particularly those who lack the customary documentation or don't wish to produce it.
The loans can, however, be very risky for the lender. Because NINJA loans require no evidence of collateral, they are not secured by any assets that a lender could seize if the borrower defaults on the loan.
NINJA loans are also risky for the borrower, unfettered as they are by the traditionally conservative bank underwriting practices that often keep both sides out of trouble. Borrowers may be encouraged to take out larger loans than they can reasonably expect to repay, particularly if they focus on a low introductory interest rate that will rise in the future.
NINJA loans can be extremely risky for borrowers and lenders alike.
NINJA Loans and the Financial Crisis
After a high level of loan defaults helped trigger the 2008 financial crisis and a crash in real estate values in many parts of the country, the government imposed stricter rules on lenders, making loans more highly regulated than before, with mortgage loans seeing the greatest impact.
The 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act created new standards for lending and loan applications. The new rules largely did away with NINJA loans, requiring lenders to obtain more comprehensive information about prospective borrowers, including their credit scores and documented evidence of their employment and other income sources.
The proliferation of NINJA loans was a contributing factor in the2007–2008 financial crisisandhousing bubble. One research paper estimated that such loans accounted for $100 billion, or 20% of total losses, tallied during the crisis.
Are NINJA Loans Still Available?
NINJA loans have largely ceased to exist in the United States due to tighter lending standards put in place after the 2008 financial crisis.
Why Did Banks Offer NINJA Loans?
Prior to the financial crisis, banks became greedy in profiting from writing home loans. NINJA loans were originally designed for borrowers who had difficulty producing the necessary paperwork to verify their income and assets, such as prior tax returns because they derived their income from untraditional sources where such documentation is unavailable (e.g., tips or a personal business). Lenders often extended these loans to borrowers based purely on their credit scores, without any further documentation of the individual’s ability to make payments.
What Are Other Terms for NINJA Loans?
NINJA loans (no income, no job, no assets) are a category of low/no documentation (low/no doc) loan, also known as "liar loans."
The Bottom Line
Popular in the early- to mid-2000s, NINJA loans (which required no proof of employment, income, or assets) were partly responsible for the housing bubble and subsequent collapse coinciding with the 2007–2008 financial crisis and the ensuing Great Recession. Since that time, new regulations have largely stamped out this practice.
FAQs
Key Takeaways: A NINJA (no income, no job, and no assets) loan is a term describing a loan extended to a borrower who may have no ability to repay the loan. A NINJA loan is extended with no verification of a borrower's assets.
Are Ninja loans still available? ›
Before the housing collapse, borrowers could get no-income, no-job, no-asset mortgages that didn't require lenders to verify income, employment or assets. The NINJA loan, which is no longer on the market, essentially took the borrower's word that the loan application was accurate.
What was the problem with Ninja loans? ›
Disadvantages of NINJA Loans
NINJA loans carried an increased risk for both borrowers and lenders. On the lender side, the loans required no evidence of collateral, which essentially made them unsecured loans. It meant that in the event of a default, the lender could not seize any assets to cover their losses.
How do you explain what a loan is? ›
A loan is a sum of money that one or more individuals or companies borrow from banks or other financial institutions so as to financially manage planned or unplanned events. In doing so, the borrower incurs a debt, which he has to pay back with interest and within a given period of time.
Are Nina loans still available? ›
A no-income, no-asset (NINA) loan is a type of mortgage loan that doesn't require borrowers to share their personal financial information. NINA loans are no longer available for owner-occupied properties.
What app gives you $1,000 loan? ›
Payactiv would be our top pick for ease, speed, cost, and loan amounts, but you can only get Earned Wage Access through Payactiv if your employer is a partner. Borrowing limits are set by your employer, too. But you could potentially borrow up to $1,000 if you have direct deposit set up and up to $500 if you don't.
What is the maximum loan amount for CreditNinja? ›
Generally, we offer unsecured loans up to $5,000.
What is a ninja loan? ›
A "ninja loan" is a term that gained popularity during the subprime mortgage crisis of the late 2000s. It refers to a type of mortgage loan that was issued to borrowers with no income, no job, and no assets. The acronym "NINJA" stands for "No Income, No Job, and no Assets."
Who invented Ninja loans? ›
No income, no job, no assets ("NINJA")
The term was popularized by Charles R. Morris in his 2008 book The Two Trillion Dollar Meltdown, though the acronym had been publicly used by some subprime mortgage lenders for some years.
Are Ninja loans real? ›
Key Takeaways
They may also be called "no-doc" loans or "stated income, stated asset" loans. NINJA loans are issued by lenders who do not verify income or assets. They are risky loans that are no longer common, thanks to new regulations after the 2007-2008 mortgage and financial crisis.
Secured loans are typically a more affordable choice as they are backed by collateral and have lower interest rates than unsecured loans.
What are the 2 main types of loans? ›
Different Types of Loans in India
- Secured Loans. Secured loans are those loans that are provided against security. ...
- Unsecured Loans. These are the exact opposite of secured loans. ...
- Home Loans. ...
- Gold Loans. ...
- Gold Loans. ...
- Vehicle Loans. ...
- Loan Against Property. ...
- Loan Against Securities.
Some of the easiest loans to get approved for if you have bad credit include payday loans, no-credit-check loans, and pawnshop loans. Personal loans with essentially no approval requirements typically charge the highest interest rates and loan fees.
What is 360 loans? ›
The 360 loan is a seamless fix when it comes to financing larger purchases and costs. Designed with making your money move with you in mind. We have accommodating rates as low as 7.99%, so come in where you aren't just a customer but a member of the family!
What is a no income loan? ›
Key Takeaways
A NINA (no income/no assets) mortgage is a mortgage designed for borrowers who may not qualify for a traditional loan. A NINA loan does not require verification of your assets or income, making them more risky for lenders. Borrowers using a NINA mortgage may have little ability to repay the loan.
Are no doc loans real? ›
A no-doc business loan is a form of commercial borrowing that doesn't require extensive documentation. The term “no-doc” can be misleading, however — most of these loans require some level of documentation during the application process.
Do no doc loans still exist? ›
While no-income verification loans do not exist in the same quantity — or even in the same form — as they did pre-Great Recession, there are some no-doc mortgage loans available, and they are part of a larger bucket of non-qualified mortgages.
Do stated income loans still exist? ›
No documentation mortgages used to be called “stated income loans” and were great for the self-employed, those who worked on commission and similar types of work. Stated income loans are no longer available, below are some examples of loans that were available before the 2008.
Are payday loans still around? ›
Single-payment payday loans still exist in 27 states and are the most common type of payday loan in most of them, even when lenders also issue payday installment loans and lines of credit.
What type of loan is CreditNinja? ›
CreditNinja is a superior online lender offering more affordable personal loans for borrowers with low credit scores. Our quick and easy loan process allows you to get the cash you need, at ninja speed. If you're currently experiencing a financial emergency, CreditNinja is here to help.
