You only get credit if you don’t need one. This somewhat cynical statement describes the behavior of many banks.
Solvent borrowers with high, regular incomes are banking favorites.
Often, well-earning bank customers could pay for the new car or the new kitchen out of their own pocket, so strictly speaking they don’t need a loan.
Getting a low-income loan, on the other hand, is not that easy.
It is low earners for whom there is no other way than to finance urgently needed investments with a loan.
A low-income loan is by no means a sure-fire success, but it is feasible under certain conditions and to a reasonable extent.
Minimum income, seizure allowance and household bill
Credit with little income does not mean credit without income – more precisely without income, which can be available as security for the bank in an emergency.
Borrowers must therefore have a certain minimum income.
There is no fixed definition for the minimum income.
It varies from bank to bank, depends on the personal and economic situation of the borrower in individual cases and depends on the amount of the loan and the term.
When calculating the minimum income that a certain borrower has to prove, the factors of household account and attachable income play a major role.
Garnishment exemption limits: no installment loan without attachable income
Installment loans are regularly secured by assignments of wages and salaries.
However, only the portion of the wages that is subject to the attachment can be effectively assigned.
The amount of the attachable portions of wages and salaries results from the respective attachment tables in which the attachment exemption limits are specified.
The exemption from attachment is based on the number of dependents.
Here is a link to a table about the garnishment exemption limits.
The seizure allowances change at regular intervals. The table was recently adjusted. It is expected to apply until June 30, 2019.
If there are no maintenance obligations, at least a net income of 1,140 USD must be earned so that a small amount can serve as security for the bank.
Now, no bank will be satisfied with the assignment of a few USD per month when granting customary installment loans.
In principle, the attachable income must correspond approximately to the monthly installment for the loan.
For a loan of over 10,000 USD with a term of five years and a current interest rate of 5%, this is approximately 177 USD.
A single person without a maintenance obligation must therefore earn at least 1,390 USD net in order to be considered as a borrower for the bank.
However, some banks are satisfied with a lower income below the attachment limit. However, these are mostly so-called short-term loans or mini loans.
Budget bill: What amount is not needed for living expenses?
The principle of the household bill is simple. All income of a year is compared to all obligations.
A small reserve may be included in the commitments.
If the income exceeds the expenses, plus the reserve, this amount is divided by twelve months. The monthly surplus is the amount available for the installments of a loan.
With this simple calculation you get a rough estimate. However, the bank does not have to estimate the same.
Banks operate their household accounts according to certain guidelines that they set individually.
For example, the number of family members, family income, property and much more are taken into account.
As a rule, banks do not prepare individual household bills. Rather, there are general guidelines.
A theoretical example that does not occur in practice:
A family with two minors, school-age children, both parents working, the family lives for rent, according to the guidelines of a certain bank needs 2,500 USD to support themselves.
The bank will use this amount as part of its review of the customer’s performance. The household bill drawn up by the customer is of secondary importance.
Banks use different guidelines to determine the cost of living and to determine economic performance and therefore come to different results.
One bank may accept the budget bill for a particular customer for lending, another bank may not.
For loans with little income, it makes sense to make several specific loan requests.
You don’t have to give up straight away if a bank refuses the loan request.
Tip: Make sure that the credit inquiries are evaluated as neutral to the conditions. All known comparison portals meanwhile promise schu-neutral inquiries from Credit bureau.
Get an overview with a credit comparison
The approximate household bill shows you how much money is available for loan repayment after covering the cost of living.
You can use the attachment table to determine the amount that can be assigned to the bank for security.
It will often suffice to deduct the non-seized amount from your net income. The difference is available for loan repayment.
However, if the determined cost of living is higher than the seizure-free amount, the difference between the cost of living and net income is decisive for the estimation of the possible monthly loan rate.
The monthly charge for the cheapest effective annual interest rate is shown in the offer line. However, they will not receive this interest rate.
The details in the two-thirds example (average interest rate), which you can find in small print under the respective offer line, are more realistic.
By varying the term and the net loan amount, you can estimate which loan provider is worth applying for.
Another question is whether you actually get the loan on the estimated terms.
The answer depends on the specific lending guidelines of the selected bank.
Also note that the overall cost of a loan increases with the term.
Loans for low earners
An alternative to the automated comparison computers of known portals is the engagement of a reputable credit broker who works without prepayment.
Hire a credit broker like , let a professional figure out the best loan offer for you. This is done by comparing the conditions of the partner bank offers.
Credit intermediaries receive a commission, which is included in the effective annual interest rate.
This commission is regularly taken over by the bank or mostly paid by the lender.
The advantages of credit intermediaries like lie in the manual processing of the loan request, while the credit comparison of financial service providers like smava works automatically regardless of the special circumstances of the individual case.
also knows the exact interest rates and conditions of the partner banks. The financial service provider therefore knows exactly which partner banks are most likely to grant low-income loans.
Despite accruing commissions, credit offers from can therefore be cheaper in individual cases than offers that are obtained via an automated loan comparison.
advises customers on loan options if it is hopeless to realize the original loan request. This is also an advantage over a machine.
Low income loan without Credit bureau?
Credit bureau-free loans are brokered by credit intermediaries and granted by Sigma Bank.
The expensive loans for amounts of $ 3,500, $ 5,000 and $ 7,500 are considered if it is no longer possible to grant normal installment loans because of a bad Credit bureau.
However, if a conventional installment loan fails due to insufficient income below the garnishment exemption limit, there is no loan without Credit bureau.
We have given details in the article on loans without Credit bureau.
Short-term credit and small-loans
Short-term loans or small-loans are loans for small sums with terms of around one to two months. These loans are extremely expensive.
Some providers also grant short-term loans when there is no attachable income. Sometimes the income limit is only 500 USD.
Short-term loans serve to bridge short-term financing bottlenecks.
If you opt for such a loan, you have to be sure that you can repay it after the short term.
Otherwise there are considerable disadvantages, such as high reminder fees, in addition to the already relatively high interest rates, and entries in the files of the credit bureaus.
The offer from the Targobank stands out among the short-term loans.
Amounts between 100 USD and 3,000 USD with terms between two months and six months can be applied for.
The loan is granted monthly from a net income of 601 USD.
It is doubtful, however, whether loans of over $ 3,000 can be granted with such a net income. Rather, it will be relatively small amounts of credit.
Improve credit opportunities with collateral
Low-income earners with an income just above the garnishment-free limit can improve the willingness of banks to lend through additional collateral.
The prerequisite is, of course, that banks accept additional collateral in addition to the assignment of wages.
Dedicated car loan is a good example.
If the vehicle is transferred to the bank as security, a loan for people with low but attachable income will be possible even with a house bank.
Securities, savings contracts and endowment policies are the main types of collateral.
Theoretically, the registration of a land charge is first-class security. However, mortgage loans are more likely to be considered if the loan amounts are relatively high.
Otherwise, the effort is not worth it.
Apart from the registration costs, borrowers unnecessarily give away a rank in the land register.
If the amounts are less than 50,000 USD, a land register entry actually makes no sense.
However, low earners will rarely benefit from such large amounts of credit.
However, the entry of a land charge in the land register can be useful if the loan is to be used for expenses related to the home.
If low-income earners can only get the required amount via a land charge registration and there is still an acceptable rank available, such a solution is available.