Those who open a loan but have only a small income often encounter difficulties with the banks. Banks lend when certain collateral is available. A regular income is such security, but only if it has a level that seems reasonable as security for the loan that is being sought. Additional collateral is often required for a small income loan.
The small solution: the overdraft facility
Overdraft facility is the easiest solution for people looking for a way to get a low-income loan. However, there is usually no particularly high credit here. Often, the amount of overdraft facility that the bank grants depends on income and is about two to three times higher than this. The scope is quite limited at this height.
It is not advisable to exceed the level set by the bank because the bank is punishing this jump with very high interest rates. These are usual with overdraft facilities anyway, you have to expect interest of twelve to fourteen percent.
Small income loans are possible
If you want to take out other loans with a small income, you can usually only get very small amounts – if at all. There are no general rules for how much income must be in order for a loan to be granted. Some banks offer loans from a monthly income of around 600 USD. However, it is clear that the customer must not only be able to repay the installments of his loan, but must also make a living. No matter how these costs are actually incurred, the bank uses flat-rate values that can vary depending on the credit institution.
In principle, a loan is not excluded even with a small income. If the loan is refused at an institution, you should not give up immediately. In any case, you should also pay attention to the interest rates charged by the bank for installment loans. With a small income, the bank has less certainty that the loan will be repaid. Perhaps that is why it will set interest rates higher.
Always helpful: additional collateral
It is always good and helpful to be able to show additional collateral in addition to your income. These can consist, for example, of real estate or valuables. Assets from insurance are also an option. Banks also accept guarantors, i.e. people who guarantee that the installment payments for the loan will be made. If the borrower does not repay the loan, the guarantor must actually pay.
If the borrower is not able to pay the loan at all, the guarantor has to pay the full amount. So you should think carefully if you want to use a guarantee or if you have a realistic way of repaying a loan. If this is the case, there is no objection to a loan with a guarantor.