What Are Nonrecourse Loans?
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
Nonrecourse Loan Definition
How Does a Nonrecourse Loan Work?
Understanding Nonrecourse Loans
How Do You Qualify for a Nonrecourse Loan?
Excellent credit Steady income Debt-to-income ratio below 36% Proof of identity Proof of income Proof of residence
Do You Have to Repay a Nonrecourse Loan?
Can a Nonrecourse Loan Become a Recourse Loan?
Is a Personal Loan a Nonrecourse Loan?
Failing to pay and defaulting on a personal loan can have a major impact on your credit score
Among the disadvantages and advantages of personal loans is that personal loans can help you build credit but may feature high rates of interest
Some lenders may charge origination fees and daily simple interest on the loan
Among the different ways to use personal loans is spending the money toward medical bills or consolidating other existing debts
Consumers can also get loans for personal use to finance home improvement projects
Banks, credit unions, and nonbank financial institutions can serve as lenders for a personal loan
You can pledge your property as collateral to secure asset-based lending
You may not have to repay a loan if you borrowed money from a loan shark
Nonrecourse Loan Laws
Alaska
Arizona
California
Connecticut
Idaho
Minnesota
North Carolina
North Dakota
Texas
Utah
Washington
Tax Implications of Nonrecourse Loans
The Takeaway
Frequently Asked Questions
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LCPL0322006
About the Author
Sulaiman Abdur-Rahman writes about personal loans, auto loans, student loans, and other personal finance topics for Lantern. He’s the recipient of more than 10 journalism awards and served as a New Jersey Society of Professional Journalists board member. An alumnus of the Philadelphia-based Temple University, Abdur-Rahman is a strong advocate of the First Amendment and freedom of speech.
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