Who grants loans to low-income earners – what should I watch out for?

 

It is not easy for a low earner to get a loan. The group of low earners includes those whose income does not exceed a limit of 400 USD per month. A low-income earner either does a mini job or works on a marginal basis. As a rule, the income of low-wage earners is always very low, so it is only enough for rent and food. Anyone who wants to make another purchase, for example because the refrigerator or vacuum cleaner has broken, is forced to apply for a loan. In principle, it is possible to get a low-income loan. However, some essential things should be considered here. Helpful information on the subject of credit for low earners can be found in this article.

Who grants loans to low-income earners and what should you watch out for?

Who grants loans to low-income earners and what should you watch out for?

There are numerous banks that offer special loans for low earners. Regional banks are usually unwilling to lend to low earners, but direct banks have good to very good deals for these groups of customers. On the Internet in particular, it is easier to find a direct bank with good conditions that lends to low-income earners. In any case, it is advisable to compare several offers with each other in order to find out which offer is the right one.

If you want to take out a loan for low earners, you have to consider one or the other. Income is a major challenge in this context. All banks want their customers to have good credit ratings, but this is not the case with low incomes. Nevertheless, there is an opportunity to get a low-income loan. Whoever has another borrower has a clear advantage. It is crucial that the additional borrower has his own income. In this way, nothing stands in the way of lending. A guarantor is also an advantage for low-income earners when applying for a loan. In this way, the bank can insure itself in the event of a possible credit default, because the guarantor takes over in the event of a default and pays the installments. In addition, the borrower must look closely at the financing terms and consider whether it is possible. Everything has to fit, especially in terms of repayment. A loan with flexible repayment options is the best option in any case.

The bank always bears an increased risk with a loan for low earners, which is why the interest rate level is usually higher than with a normal installment loan. In addition, the term and the amount of the loan differ significantly from normal loans. Loans for low earners are usually no more than 3,000 USD and must be repaid at least within the next 36 months. The borrower must also be able to demonstrate that there is no negative Credit Bureau entry. If there are negative characteristics in the Credit Bureau, it can be assumed that the loan will not be approved.

What other options are there?

What other options are there?

The biggest shortcoming from the banks’ point of view for a low-wage earner is that his income is not attachable in case of doubt. It is so low and is still below the garnishment exemption limit. As a result, some banks are unwilling to grant a loan to low-income earners, despite good information from Credit Bureau. One option to find a low-income loan is to hire a loan broker. This credit broker specializes professionally in helping special customer groups to find a suitable loan. He knows the financial market very well and can also find the right loan for a low-income earner. It is therefore an advantage to contact a credit intermediary early on. In addition, it is easier for low earners to get a Swiss loan. This is a loan that is only granted by banks in Switzerland. What is special about a Swiss loan is the fact that no Credit Bureau information is required. This loan variant is particularly suitable if you want to take out a loan with a low sum.

A good option for a low-income earner to get money would also be a personal loan. For this you borrow money from a relative or acquaintance. The advantage of a personal loan is that you often have to pay little or no interest and is much more flexible in terms of repayment. In addition, there is the possibility to look for another mini job or other minor employment in order to earn some extra money and to be able to afford other purchases.

Furthermore, a so-called trade credit can also be applied for for certain purchases. However, it only applies to certain goods and is always associated with the purchase of the goods. Therefore, a commercial loan cannot be paid out in cash and proof of income is usually required.

Another newer way to get a low-income loan is through personal loans. This does not include private individuals who are already known, but private investors who grant personal loans online. What is special about this loan is the fact that the interest rates are much lower and the conditions are much better than with a normal loan from a bank. The loan application is made on a placement platform that can be easily found on the Internet.

In addition, the lending is done anonymously. The applicant must disclose certain credit metrics to the private lender so that the lender can be sure that the applicant can also repay the loan. As a rule, even several lenders participate in lending by means of smaller amounts. With this variant of risk diversification, lenders are more willing to grant a loan to a low earner. In addition, the personal loan is particularly suitable for low earners because the income does not have to come from a job. Despite everything, it is important that the borrower has the best possible credit rating and collateral. If defects are identified, it can be assumed that the interest will be higher or that the loan application will even be rejected.

Loans for retirees, what you need to know

 

The loan to pensioners falls within that particular category of financing that we can define as subsidized. The minimum and essential prerequisite, as can already be seen from the phrase, is that of being a pensioner. The pensioner status to access the pensioner loan does not necessarily have to be that of direct pension ownership but also that of indirect retirement, i.e. the survivor’s pension. 

Even those who inherited the check (reversibility) have the right of access to loans for pensioners, and this applies both to the loans requested from a classic bank or financial institution, and to those that are requested online.

A pensioner loan 

A pensioner loan 

Usually the pensioner loan is granted a little to all pensioners, even if greater difficulty in obtaining the loan occurs for the social pensioners, or for those who take the check or social pension, since the monthly received is so low that does not allow the installment to be withheld and in most cases the request is simply refused.
As regards the type of pensions underlying the loan, almost all the entities and draw up loans to their pensioners both directly and through an agreement. Among the institutions that provide loans to their retirees, we report the following:

  • first of all loans to pensioners par excellence, that is, those proposed by social security;
  • then we find the Enasarco pension loans (social security agency agents and sales representatives);
  • loans to Enpals pensioners (national social security and assistance agency for show business workers);
  • CNPR pension loan (national pension fund for accountants and commercial experts);
  • EPPI (industrial experts pension fund) retirement loans;
  • retired loans IPOST (post-electronic institute);
  • Inpdai pension loans (national pension fund for industrial company managers).

Characteristic of the pensioner loan

Characteristic of the pensioner loan

A characteristic of the pensioner loan is the age of the pensioner himself. Over the years we have witnessed a gradual increase in the age of the applicant for standard loans to pensioners: from the initial 65 – 70 years it has gone up to 75 – 80 years and even today loans to pensioners who have reached the venerable are advertised age of 85 – 90 years.
But how can the loan to a pensioner be reconciled with his life expectancy? In this case, it is necessary to distinguish according to whether the loan expiry falls within or exceeds the average life of the man today. This, it is known, is about 75-78 years for men and 78-82 for women. Well, personal loans to new retirees whose maturity is below average life do not give particular problems and are treated like other loans.

The problem of loan solvency, on the other hand, arises when the maturity goes beyond the average life or is even turned on during this period. What are the solutions? That is, what if you look for a 10-year loan at 85 – 90 years old? In most cases there is a direct refusal, if this does not happen, the most logical solution would be that of a third party guarantor who should guarantee the payment of the installment if the pensioner dies.

However, the solution that is proposed by the lenders is that of the single signature with the stipulation of an insurance policy which guarantees the repayment of the loan in place of the deceased pensioner. It should be noted, however, that this insurance, given the high probability that the death event will occur, has very high costs that profoundly affect the APR of the loan to pensioners in the following way: the higher the age of the pensioner, the higher the cost will be insurance. To conclude, we advise our pensioner to avoid, where possible, to join the financing guaranteed by the policy and rather seek a third party guarantor.