Many people who practice a job today have a pay well below the tariff. Especially when a person is employed in the low pay sector, the question is often asked if there is a low income loan. Within Germany, there is often the problem that the credit seekers actually meet all the requirements for the award of a loan and still receive no credit. The difficulty is that the income situation is just too weak.
Not every bank has a low-income loan
Often, credit seekers do not get a loan, although a fixed employment relationship has existed in part for many years and the information of credit bureau is in order. Even if all this should work, there are still many creditors to credit rejections. The low-income loan is not offered by any bank. Few lenders are willing to lend for low-income lending and this includes, for example, Targobank. If the prospective loaner receives an income from a permanent employment relationship, there are already opportunities at the Targobank. Nonetheless, borrowers must always keep in mind that a lender will have a heightened risk due to the lower income and thus interest rates will rise.
This is actually not fair, because just who has a low income, but should receive particularly favorable terms. If you have a very high monthly income, you will hardly need a loan and it will still receive favorable interest rates. Should a lender get a loan approval, then more collateral and other costs are usually required. Often, a prospective loan applicant is required to take out a residual debt insurance. For example, those who want to finance a car will often have to pay a higher deposit compared to a high earner.
The risk of a low-income loan
Thus, low income earners do not just have a loan. But those who have financial difficulties as low-income earners should always consider whether they need a loan at all. Especially in the low-wage sector, the low-income earners often have financial difficulties and end up in debt. Many even lose their jobs and receive unemployment benefits, which does not even make their livelihoods affordable. A loan termination comes about at unpaid rates, followed by a credit bureau entry and thus the credit is lost for the time being. It is always better to first ask friends, acquaintances or family members for help.