Especially people whose income is average or only below average often need help with a loan. But banks and other financial service providers, in particular, put large obstacles in their way when they want a loan. Anyone who needs a loan for low-income earners must be able to present convincing arguments or be satisfied with only a small sum.
The lack of creditworthiness: the big problem with loans for low-income earners
A loan check usually consists of two parts. Cream Banks check the entry in the protection association for general credit protection (Credit Bureau) to make sure that there are no old debts that are too high and that the debtor’s payment behavior is correct. They also test their creditworthiness.
This word describes the borrower’s credit repayment ability. While the Credit Bureau entry is usually fine even for a small earner, there are often problems with creditworthiness, because the larger the loan amount, the more difficult it is to prove that he can actually repay it. Because of his low income, he lacks the means to pay the monthly bills and repay the installments.
The common approach
However, a loan for low-income earners is not impossible. Instead, the borrower must practice a virtue that the banks require from many customers who want a loan: he must be satisfied with a small loan and often also have to accept a long term. The lower the loan, the greater the chance that the applicant will be able to repay the amount despite his low income. It only becomes problematic if a small loan is not sufficient to do justice to the reason why the small earner wanted to take out the loan.
A bigger loan for low earners
But even a larger loan for small earners is not entirely impossible, but can be granted under certain conditions. A co-applicant is usually required by the banks. This means that the borrower does not apply for the loan alone, but together with his spouse, for example. Ideally, the co-applicant has a high salary and thus compensates for the greatest weakness of the actual borrower. As an alternative to the co-applicant, he can also present a guarantor.
The difference is that in this case, not both people formally apply for the loan, but the guarantor is only a form of substitute. He signs a binding declaration that he will ensure the repayment of the loan should the actual applicant not do so in the To be able to do. In this case, too, it is an advantage if the guarantor has the highest possible income, because the bank makes the amount of the loan that it grants largely dependent on its income.