Low-wage earners always have the option of receiving an installment loan for low-wage earners if they meet certain requirements. The loan must always be in proportion to the income, so it is clear from the start that the loan will not be particularly high. With this group of people in particular, the loan costs should be as low as possible. Unfortunately, this is not always the case, because banks can pay bad credit with high interest rates.
The question often arises as to when you are a low-income earner, because that cannot always be clearly defined. All people who earn below average are low earners. Hourly wages must be less than 8.95 dollars if you count as a low earner.
Anything above that is already in another work class. So everyone can calculate how much they really earn and are entitled to an installment loan for low earners.
If an installment loan is to be taken out for low-wage earners, banks generally do not provide the good conditions as with an applicant who has a higher income. The loan is often only granted as a small loan, the loan amount of which does not exceed 2,000 dollars. This protects banks because they see a low earner as a high risk of default. But the borrower can minimize this risk himself by increasing his collateral.
If you are thinking about a low-income installment loan, you should first consider how much money you need. A budget can be used to see exactly whether money is available for monthly payments. With this budget, the latest bank statements and the employment contract, a conversation can take place at the bank. If your own collateral is too low, a surety can be provided.
A guarantor also signs the loan agreement and is liable for the loan installments with his income. If, for whatever reason, the borrower can no longer repay the installments, the bank approaches the guarantor, who has to pay these installments.
One of the best known forms of security is a surety, as already described. If, however, nobody agrees to sign the contract, life insurance can also be provided as security. However, this must have a surrender value of at least 5,000 dollars so that it is accepted as security. A positive Credit Bureau is also important, because it increases the creditworthiness of the loan request.