Life always costs money and so it is not surprising that many take out a loan to cope with all costs or to fulfill wishes. Banks make loans quickly, making it easy to get money.
However, banks don’t see every customer as a borrower they trust. Many do not meet the basic requirements, so banks then reject a loan application. It is the same with low-income earners who find it difficult to apply for a loan.
What makes it so difficult to apply for a low-income loan?
One of the basic prerequisites for banks is attachable income so that the loan can be secured. If this income is too low, banks classify the borrower as a risk person and rarely grant a loan to low-income earners. The salary of a low earner is often too low, so that not all fixed costs and an installment loan can be repaid. If you have no money left, you cannot pay monthly installments and will therefore not get any chances in lending.
Can the chances of getting a loan be increased?
Because low-wage earners are lacking an important prerequisite for applying for a loan, they have to try to increase their creditworthiness. In this way, the borrower can provide a surety so that he can get a loan for low-income earners. In any case, this guarantor must demonstrate a fixed income and a permanent employment relationship. The income must be so high that banks can apply for garnishment if the loan installments fail.
The guarantor therefore takes a risk, because the fact that the actual borrower cannot always pay his installments is very high. He would then be liable for the loan and not many people are willing to do so. Another option for low earners is to use their life insurance.
Banks only take this as security when the surrender value exceeds the loan amount. If all else fails and there is no other security, only a private loan remains. Many private individuals offer a personal loan on the Internet, but these often have high interest rates. The family can also grant a personal loan that would be interest-free and thus the costs would be manageable.
Getting a low-income loan is not easy, but it is doable. Different options should be examined and used so that collateral can convince a bank to grant a loan.