A loan for a nonexistent property is called?

• A. Air Loan
• B. Ghost Mortgage
• C. Fictional Financing
• D. Nil Property Loan

Answer: (A)

The idea being tested is a loan that is secured by collateral that does not exist. This is a form of loan fraud where the lender disburses funds thinking there is real property backing the loan, but the asset is fictitious or never existed. The term “air loan” captures that there is nothing tangible behind the loan—funds are effectively lent on air. In fraud schemes, this often involves forged documents, fake deeds, or misrepresented property details to persuade the lender to release money.

Among the options, the phrase “air loan” is the standard label for a loan obtained with nonexistent collateral, which is why it’s the best fit. The other terms aren’t conventional terminology used to describe this specific scenario, so they don’t align as precisely with the concept of lending on non-existent property.