Probably anyone who wants to borrow money will consider a loan without collateral. It is logical, of course, to stop the “guard over your head” when you can borrow even without liability. It sounds simple, but it’s not that simple.
You will not succeed in a bank without proof of income and clean registers
You can get a loan without real estate collateral from the bank up to the amount of USD 600,000 – according to the current offer of individual banks. Banking institutions scrutinize the applicant’s credit history very closely and consistently and look at the bank’s and non-bank credit registers of debtors. If the borrower has negative records in the registers, even five years later, the bank will refuse the loan. Such a troubled client in the banking sector will not receive funds even if he guarantees real estate.
Banks have additional claims on applicants and impose additional conditions on them, also because of the Consumer Credit Act. Anyone applying for a loan at the bank must provide proof of income. Applicants who are headed by the labor office, unemployed or working illegally have the door closed at the bank.
Applicants who fail in their application have the option to obtain a non-bank loan from a non-bank company licensed by the CCB.
How much can you borrow from a non-banking company
Non-banking companies provide loans to applicants who have records in debtors’ registers of up to approximately USD 30,000 without pledging real estate. They are mostly companies that offer loans for a shorter period of time, but with enough interest. The APRC of such loans goes to dizzying heights.
If the applicant has a distraint, then no one will grant him a loan without collateral. There is a risk that the applicant may go into insolvency and the unsecured creditor in insolvency proceedings receives on average only 30 – 40% of the claim.
In the Czech Republic, an applicant can obtain a loan without pledge only if it does not have negative records in the debtors’ registers and is sufficiently creditworthy. Such loans are provided by banks or certain non-banking companies associated in the SOLUS register.
The solution is non-bank loans collateral property
If someone needs to borrow a sum of more than USD 100,000 and the bank fails their application, they can use a loan with collateral. The main reason why loans are provided against real estate collateral is to secure the receivable in full even if the applicant goes into insolvency.
Other financial products, such as bank mortgages for the purchase and reconstruction of real estate or American mortgages, will not do without the necessary collateral.