Those who earn little for it are difficult to pay unexpected bills or purchases from the current financial budget. Earning little means saving. But saving in the traditional sense that something is put aside can be forgotten by a low earner. In order to maintain the standard of living to some extent, every cent is turned over twice. However, a low-income loan often has to be applied for. The credit opportunities are not bad, but there are a few things to consider.
The loan despite low income – the outlook
Banks have conditions that a loan seeker must meet. That is the sufficiently high income, the impeccable Credit Bureau and the permanent employment. If you can show that, you can easily get a loan. If you have a low income, the bank will draw up a budget. This shows whether and in what amount an installment can be paid.
The loan seeker should know that a loan with a long term has a low rate and a short term has a high rate. The long-term loan will then be somewhat more expensive overall, since the bank also includes a risk of default. According to experts, a loan should retain at least 10% of its net income as a financial buffer. In most cases, however, a loan fails despite a low income, the bottom line is nothing.
In order to meet the conditions for a loan despite low income, the income must have a attachable portion of at least 80.00 dollars. This is a net income of 1,160 dollars for a single person. However, if four people live in the household, the garnishment limit rises to 2,500 dollars net. There must also be an open-ended employment contract.
Trial period is not recognized. The employment contract must have existed for at least one year. If someone has a fixed-term contract of employment and needs a loan, they will only receive it if they include a second borrower or a guarantor in the loan contract. If he pays within the time limit and thereafter there is a permanent employment contract, a loan is also approved.
Many people who earn very little still have a good credit rating from Credit Bureau, all debts have been paid properly, and there have been no warnings or other notices. But the income is too low to pay a loan. A small loan could then be a way out, provided this sum is sufficient for the customer. With a small loan, one thinks of 1,500 to 10,000 dollars. The latter sum can be a considerable difficulty on the part of the installment amount.
The loan despite low income – the possibilities
One of the solutions for obtaining credit could be the overdraft facility. Each bank provides its solvent customers with a free overdraft facility. People with low incomes also receive it. If someone now earns 1,000 dollars net, the bank could graciously provide up to three net monthly salaries as overdraft facilities. That would be a good starting point for a quick loan. However, the overdraft facility should only be used for a short time because it is very expensive. One expects a double-digit interest rate, an installment loan would be much cheaper.
If the bank criticizes the low income, proof that the customer wants to create a future with the money can cause the bank to provide the overdraft facility.
If the overdraft facility is not the solution for a loan despite a low income, a second borrower or a guarantor can secure the loan. The partner could act as a borrower. If a guarantor is named, it must be solvent and provide a legally binding guarantee. The guarantor must also be fully informed of the risk of a guarantee. The guarantee increases the chances of getting a loan despite a low income, but the borrower should also be aware that he is including another person in his debts. For this reason, there should be an absolute relationship of trust between the guarantor and the borrower. Think of parents or grandparents who vouch for their child or grandchildren. But this is only recognized on the condition that the guarantors have a sufficient income and can intervene in the event of a loan default.
The solution with the second borrower is a version that can also be successful with a low income loan. Think of a couple where one partner earns well and thus secures the credit for the less earning partner. Banks generally like to see the signature of both of them.
Alternatives
Another option for credit protection is real estate or a loanable life insurance. If the insurance has been saved for a long time and there is a surrender value of 5,000 dollars, the insurance could be loaned. The customer is not in debt at the moment, but is lending his own money. He then pays the insurance back in monthly premiums. A car in mint condition can also be used to hedge a loan. To do this, the vehicle letter must then be deposited with the bank. Banks also recognize savings contracts or other valuable property collateral with a loan despite a low income.
The credit comparison
If a version of the aforementioned options can be realized with a loan despite low income, a loan comparison should nevertheless be carried out. A low interest rate is particularly important for small incomes because it does not make the loan unnecessarily expensive. A credit comparison can be done online for free. He shows the customer a list of cheap providers and their conditions. If he chooses a provider, the loan can be made directly through the comparison despite the low income.
It is important to know that the interest shown is not relevant for all customers. Since interest is calculated depending on the creditworthiness, only the customer who has a good creditworthiness receives a good interest rate. If you have a small income, you should apply for a long-term loan, even if it becomes a little more expensive. This keeps the rate affordable.
