A NINJA loan (no income, no job and no assets) is a type of loan offered by certain lenders to borrowers who may have a low or no ability to repay. These loans were popular prior to the 2008 financial crisis due to their attractive low interest rates that increased over time and the quick and easy approval process with no documentation required by the borrower. This type of lending posed considerable risks with both lenders and borrowers.

In response to the 2008 financial crisis, the U. S. government issued regulations aimed at improving the quality and standards of the American lending industry. This has resulted in the near complete disappearance of NINJA loans from the market. The new regulations included a ban on loan officers or brokers from collecting fees from borrowers if the loan was found unsuitable for the borrower; principles of responsible lending; and consumer protections for borrowers.

Due to the lack of regulations and consumer protections, many borrowers who opted for NINJA loans were unable to meet their loan obligation, resulting in many of them defaulting. This in turn adversely affected the lenders and led to them tightening up their lending requirements.

Today, while most reputable lenders generally avoid NINJA loan practices and opt for more rigorous loan qualification standards, some unscrupulous lenders still engage in this type of loan. Consumers should caution against such loans, as they are extremely high risk and often exploit borrowers. By signing the loan documents, borrowers are still obligated to repay the loan even if the interest rate is later increased or the borrower determines that they cannot make the payments. If a loan package is presented to a consumer without much information on the terms and conditions, it is important for the consumer to obtain as much information as possible in order to make an informed decision.

NINJA loans remain an important part of our lending landscape and borrowers should take precautions when considering any loan product. Before taking out any loan, borrowers should make sure to research all the terms and conditions and determine whether the loan is suitable for their needs. Borrowers should also consult financial advisors and be sure to read all documents carefully before signing any loan agreement or documents.