Credit with 600 USD or 700 USD monthly net income. In fact, there are financial service providers who provide credit products despite the low income.
At first glance, this is surprising. Because where are the collateral for the lender at 600 USD or 700 USD net?
Consumer loans are generally only secured against the loss of credit by means of silent cession of wages.
But with 600 USD or 700 USD monthly income there is nothing to relinquish. Only attachable wage shares can be ceded. At present (September 2019), only wage shares can be attached if more than USD 1180 per month is earned.
If you take a closer look, you immediately find a reason for the financial services providers’ willingness to take risks. The loan variants granted are adjusted to the increased credit default risk.
Credit from 600 USD income: offers
As far as we know, there is currently only one regular direct bank that issues loans to customers with a monthly net income of 600 USD or more.
More precisely: the monthly income must be over 600 USD, i.e. at least 601 USD.
Anyone who earns around 700 USD net per month can always hope for a small loan afterwards, at least that applies in principle.
Loans of at least 1500 USD must be taken out at Cream bank. The minimum rate is 50 USD.
Based on an average interest rate of 4.6% effective, the term may not be longer than about 31 months.
For a loan with these conditions, borrowers pay total costs of 94.41 USD (with a term of 31 months).
In addition to the Cream bank, some special providers provide so-called short-term loans, also called small loans.
With a monthly income of 600 USD, it is difficult even with these special providers to get a Small loan.
With Small loan providers, there are some peculiarities that actually make the loan offer unattractive.
The effective annual interest rates mostly correspond to those of particularly high interest overdrafts.
But that’s not all.
The providers advertise their loan product with the catchword bridging loan. Short-term payment difficulties should be overcome with such borrowing.
In practice, this means that lending must be quick. A quick loan payment is also possible, but only at horrendous costs.
Viloan has to put 69 USD extra on the table for the express payment, Ferratum has a fee scale between 29 USD and 299 USD and with Neofunding the quick payment costs 39 USD.
In relation to the term and the low loan amounts, the use of express functions leads to exorbitantly high effective interest charges.
There are also fees for other special services such as credit certificates or the payment of installments.
Providers of short-term loans understand customer loyalty. New customers usually receive very small amounts and the terms are short.
Existing customers, on the other hand, are lured with longer terms, installment payments and higher loan amounts. The prerequisite is, of course, that the pre-credits have been properly serviced.
Customers of these special providers must be aware of an important credit condition from the start. At the end of the short term, the entire amount is due immediately. If you fall behind, you pay heavily and get a negative Credit bureau entry.
A weak Credit bureau score (credit despite a negative Credit bureau) is not a reason for excluding lending for most providers of short-term loans. However, it is possible that expensive credit certificates or default guarantees have to be bought from banks.
No provider of small loans dispenses entirely with Credit bureau information.
Credit with 600 USD or 700 USD makes sense?
The credit providers listed above and perhaps other banks may provide a loan even with an income of only 600 USD or 700 USD per month.
The crucial question, however, is whether a borrower should even afford a loan in this income situation.
How much can a consumer with such a low income spend on the monthly payment and the repayment of the Small loan?
If realistic information is given on the cost of living, only one result can actually come out. There is no money for a loan.
A different result may be possible if the borrower lives in a household for free and may also get support from third parties. For apprentices and students, this may sometimes happen.
Small loan providers expressly appeal to their customers’ responsibility not to overindebt themselves. Short-term loans would only be suitable for bridging short-term financing bottlenecks.
But how can someone who can just make a living with 700 USD net and maybe still be able to raise the loan installment, be able to repay 150 USD or a higher sum in one amount within 14 days or a month?
Financial shortages are not eliminated by taking out short-term loans. They are more likely to get worse.
At best, existing financial problems are pushed forward. The price is high. Interest and other costs widen the financial gap.
Conclusion: credit with 600 USD income not recommended
In our opinion, anyone who earns 600 USD or 700 USD per month should refrain from borrowing from banks.
If there is actually a short-term bottleneck that cannot be overcome with your own funds at first, relatives may be able to help.
Asking the house bank for a small overdraft is another solution. Banks will be ready to do so once all of their obligations to the bank have been met.
Overdraft interest rates are now lower at most banks than at specialist providers of small loans.
Both approaches have a decisive advantage over short-term loans. The small loan taken out can be repaid in installments, unlike most small loans.
The Small loan from Cream bank also offers this possibility. If it is absolutely necessary to take out a mini-loan with an income of 600 USD or more, the offer of the Cream bank is most recommendable.
However, Cream bank will expect an excellent credit rating. Credit bureau problems and poor score values should rule out lending.
In contrast, low income alone has no negative impact on score values. Credit bureau, for example, does not collect any data on the level of income.
Finally, there is a way out that, in most cases, is most likely to result in a loan with reasonable terms.
Borrowing is requested together with an applicant who also has income.
However, the income of the co-applicant must be sufficient for the loan to be granted according to the bank’s credit rating criteria. Realistically speaking, from the bank’s perspective, it is only the co-applicant to whom the loan is granted.