An installment loan for low-income earners is most likely still possible via the direct banks on the Internet, since, in contrast to large and house banks, these often place somewhat lower demands on the creditworthiness of the applicant and future borrowers. The direct banks can be found within a few minutes by means of a credit comparison, which also provides direct information about how much the loan costs in total and at what amount the monthly installments are due.
Low income make high loans
Nonetheless, low-wage earners are by no means ideal candidates for banks, because the low income makes high loans, above all, almost impossible unless additional collateral is included in the loan agreement. The borrower’s income, both type and amount, plays a major role in evaluating creditworthiness and is considered the main factor when it comes to whether a loan is ultimately issued or rejected. Accordingly, especially high loans are often only possible if there is at least an average income and permanent employment.
The higher the income, the higher the credit line
The credit line is determined by the bank and serves as an internal guideline up to which maximum amount a person can take out a loan. For low earners, this credit line is therefore smaller than for people with a very high income. Affected persons should also make sure that they choose a long term for the low-income installment loan so that the amount of the monthly installments does not exceed their own budget.
The longer the term of a loan is measured, the lower the monthly installments are logically. As a borrower, you have to pay off a loan a little longer, but the low installments can still be combined with a very small income.
As a rough rule of thumb, even if it differs depending on the bank, it can be said that at least a net income of 850 USD should be available so that you as an individual are even eligible for a loan. This installment loan for low-income earners may be able to ask the borrower to pay slightly higher interest rates than if the borrower had a higher income, because the bank wanted to protect itself against default.
Short-term financial injection for low earners
The installment loan for low earners can be used both as a short-term bridging of a financial emergency, but also to make larger investments that would not be compatible with a low income without high reserves. If the income is even so low that the borrower receives a rejection, he must seek additional collateral for the loan agreement.
A paid-for car can, for example, serve as attachable capital if it has at least a relatively high resale value. If necessary, a guarantor can also be used if someone is found. Its income and assets then count towards the evaluation of the creditworthiness, since this is also liable in the event of a payment default.