Loans are usually taken out to fulfill long-cherished wishes or to meet liabilities that could not be serviced without the additional money from the loan. A loan is therefore always sought if the reserves made are insufficient to fulfill the wish or to implement the planned project.
When taking out a loan, it is very important that the borrower has a good credit rating. This good credit rating can only be achieved if you have a high income. Because this income is needed to be able to repay the loan in the end.
Unfortunately, many consumers are not blessed with high incomes. Although they do regular work, they do not generate the income that the banks recognize as “high income”. In order for an income to have this rating, it must be clearly above the garnishment allowance.
It is certainly not a secret that it is not easy to find a good and fair loan with a low income. We would therefore like to show you at this point how you can take out a loan without a high income and what you should pay attention to when taking it up.
What creditworthiness says about a consumer
In order to make it clear to you why the banks and savings banks are not particularly happy when looking for a loan without a high income, you must first understand how and why the banks check the creditworthiness of their customers. How is it decisive for whether a loan can be granted or not.
In order to be able to determine the creditworthiness, the bank must carry out a credit check on the applicant. For this, information is not only obtained from Credit Bureau. Income and all expenses must also be shown openly. The bank then uses this information to create the so-called scoring value. If the scoring value is particularly high, the creditworthiness is good. If it is low, the creditworthiness is correspondingly poor.
Income therefore plays a very important role in borrowing and – in order to achieve a good scoring value – must be as much as possible above the seizure allowance. The net income is always assumed. In other words, the income that remains after deducting all taxes and cash contributions.
For an unmarried consumer who also has no maintenance obligations. The garnishment limit is currently 1,079.99 USD per month. Anything below this amount is referred to as low income and therefore requires a loan with no high income.
The Opportunities With a Low Income Loan
Even though it is relatively difficult to get a good loan without a high income, there are some ways to borrow. Consumer credit always comes first. You know this from the dealer you trust, who will be happy to offer you the right financing when you buy a new washing machine or kitchen. The specialist calls this financing consumer credit.
With consumer credit, you don’t get the money paid out and you can use it as you wish. Rather, the money is earmarked and automatically flows into the payment of the things you want to finance with it. This has the advantage that the dealer or the bank behind the consumer loan recognizes the purchased and financed items as security. Because she knows what they are worth and can keep them until you have paid all the installments.
For you as a borrower, this means that your income is not that critical to borrowing. Despite all this, they will inquire about it and you will have to state how much you earn. But if this is over 450 USD a month and you have a good credit, you can easily take out the consumer loan as a loan without high income. Without a guarantor or without a second applicant.
The second option for a high-income loan would then be borrowing with the help of a guarantee. For example, if you want to apply for an installment loan, the bank will probably first reject the loan application due to its low income. However, if you have a guarantor for the loan, the world will look much rosier again. Because the guarantor increases your creditworthiness and thus your creditworthiness. The risk of default for the bank is reduced, so that the bank can approve lending in a relaxed manner.
The only important thing for you as a borrower is that you can really repay the loan. Therefore, only take out a loan if you really have enough money to pay the monthly installments. Otherwise, there is quickly trouble with the bank, which then turns to the guarantor and demands the money from him. Because he is not only liable for you, but also for the loan. And until it is completely paid off.