If you have a low income, the signs are “save”. Every cent is planned and every USD is turned over twice before it is spent. If there are unexpected invoices or purchases, it is very difficult to pay them from the current budget. Save time – then you have it in need – a spouse can forget this saying. A financial bottleneck can often only be overcome with a loan despite low income. The credit opportunities look rather bad and a lot has to be taken into account.
The loan despite low income – the situation
When banks approve loans, they have conditions that customers have to meet. There are three approval criteria that are mandatory for Spin Lender. That is the sufficiently high income, the unencumbered Credit Bureau and the permanent employment. If the customer can meet these conditions, he can easily get a loan. For those with low incomes, the bank draws up a budget. From this it can be seen, an installment can be paid and if so how high can it be.
It is important to know that, despite a low income with a long term, a loan brings low rates, a short term gives high rates. The long-term loan is then generally somewhat more expensive because the bank calculates a default risk and allows it to flow into the loan. In most cases, a loan will fail despite the fact that it has a low income due to the fact that there is nothing left.
According to financial experts, at least 10% of net income should be put aside. If there is a financial shortage, it could be used without having to think about a loan. But for many people, even that is not possible. This creates the situation that no loan can be paid either.
Banks have their regulations from which they do not deviate, which includes a sufficiently high income that must be above the garnishment exemption limit and must have a garnishable share of at least USD 80.00. An example: A single person must earn about 1,160 USD net. A four-person household, on the other hand, is already 2,500 USD net. Banks also require a permanent employment contract.
A trial period is also not allowed. The employment contract must have existed for at least one year. Anyone who has a temporary employment contract and needs a loan will only receive it if it can be paid off within the time limit. A guarantor or second borrower could also increase the credit opportunities. Even if it is certain that the employee will be taken over, the employer could grant a loan despite a low income by presenting a corresponding certificate.
There are many people who earn little, but the creditworthiness of Credit Bureau is good. All liabilities were paid on time, there are no reminders or other serious notices, only the income is not quite sufficient. The customer could count on a small loan if the loan amount is sufficient. The small loan ranges from 1,000 to 10,000 USD. However, difficulties will arise at 10,000 USD.
The options for a loan
The overdraft facility could be seen as a loan. Each bank provides its creditworthy customers with a overdraft facility at their free disposal. A disposition is also granted for people with low incomes. If the income is around USD 1,000, a disposition of USD 3,000 could be provided. Banks usually approve three net monthly salaries. However, the overdraft facility should only be used for short-term use because it has high interest rates. Banks charge a double-digit interest rate, whereby an installment loan would be much cheaper.
If the bank objects that the income is not high, it could perhaps be documented that the customer may want to make a living with the money. This could cause the bank to approve the overdraft facility. If more money is required, a loan can be granted with a guarantor or a second borrower despite low income.
However, this is one thing with the guarantee. The guarantor must be fully informed that a guarantee is a risk. The guarantee increases the chances of credit, but the borrower should always be aware that he is taking another person into his liabilities. In order to prevent any disputes here, there should be absolute trust between the borrower and the guarantor. Maybe that could be parents or grandparents who vouch for her or her grandson. However, these guarantors are also extensively examined.
After all, they have to be solvent if there is a default on the part of the borrower. The loan must then continue to be paid by the guarantor. For this reason, banks check a guarantor very carefully. The guarantor should also know that the guarantee is entered in his Credit Bureau, which can reduce his credit rating. A second borrower could also make a loan eligible for approval despite a low income. As a second borrower, one thinks of the partner or a good friend. It too must be solvent.
The credit alternatives
If the bank asks for collateral, a property or a loanable life insurance could also be used. If the customer has life insurance that he has been saving for a long time and the surrender value is 5,000 USD, the insurance could also be loaned. So no debt is made directly, but the borrower is loaning his own money. The insurance is then saved again with monthly premiums. A car in mint condition could also serve as credit protection. Then the motor vehicle letter must be deposited with the bank. Banks also recognize savings contracts or other valuable property collateral.
The credit comparison
If the customer can provide some of the aforementioned safeguards, a loan should be compared with a loan comparison despite a low income. In addition to the interest rate, the customer can also learn the terms and conditions of the bank. The loan comparison is free of charge and can be done online. If a provider applies, the loan comparison can be applied for directly despite the low income.
The customer should know that the interest shown is not an option for all customers. Interest is calculated depending on the creditworthiness, ie he has a good creditworthiness and also receives a favorable interest rate and vice versa. With a small income, rates should be kept low so that they remain affordable. This can happen with a long loan term.