The minimum requirements to get a loan are usually a positive credit check and the age of majority of the borrower. The creditworthiness is positive if the borrower can demonstrate regular income and permanent employment. However, these requirements have now been adjusted. More and more low-wage earners, but also unemployed people, students and trainees now need a loan. The conditions have been adjusted in this regard by the banks and the credit institutions, so that there is now also a loan for low-income earners.
What is a low earner?
According to the definition in the Social Security Code is a low earner who does not earn more than 400 USD per month in income. The low earners usually work in marginal employment or in a mini-job. In the country, several million people are low earners, trainees, unemployed or students and are therefore potential customers for a loan that is adapted to the financial situation of low earners.
Risk compensation through higher interest rates and changed terms
If the bank or the lender grants a low-income loan, then on the one hand through a special condition in relation to the interest. These are usually higher than a loan for a borrower who has a permanent job and can prove a regular income. Another factor in a low-income loan is the adjusted term and a maximum amount granted to the borrower. In contrast to a loan for permanent employees, the term and maximum amount of this loan are shorter. As a rule, the banks or lenders grant a loan amount of up to 3,000 dollars over a period of 36 months for a loan that is requested by a low-income earner.
Positive Credit Bureau information is a must
In order for a low earner to be granted a loan, the borrower must have positive Credit Bureau information. If the Credit Bureau information is negative, the low-income loan is generally not granted because the bank or the lender has legitimate doubts about the payment behavior of the potential borrower. Before taking out a loan for borrowers, advice is given to the borrower from the house bank or another bank.
This advice also includes the purposes for which the low-income earner should take out the loan and how the monthly installments affect the standard of living when repaying the loan. In addition, counseling before taking out a loan is worthwhile for low-income earners, because it is only so objectively determined that despite the subsequent monthly burdens from the rates at which the loan for low-income earners must be serviced, there are enough financial resources left for the cost of living. In addition, the bank or the lender can provide advice on the purpose for which the loan is to be used, because a hi-fi system, a notebook or an LED TV are not always part of the daily needs.