Those who receive sick pay probably don’t have a small cold, but a really serious illness. Restoring the patient is often completely open. Not only do illnesses occupy a large space, but sickness benefit is also provided with a reduced income. If a rehabilitation measure is still pending, the period will be even longer. Because of this, many patients find themselves in a financial emergency. A loan despite sick pay could then be the solution.
The loan despite sick pay – the prospects
Most banks take a skeptical view of a loan despite sick pay. After all, the customer does not know whether and when he will be restored or whether a disability pension will be due in the end. Unemployment was not uncommon after a long illness. A situation that banks also know and therefore keep very low on a loan despite sick pay.
But there are probably important reasons why a loan is sought. The best served is the customer who goes to his bank where the salary account is kept. It can be seen from this that the customer very well has an income. But it is often assumed that sick pay is not attachable. But this is only partly true. Because sickness benefit is legally equivalent to a pension and pensioners are given a loan.
Of course, the clerk will not offer the customer a long-term loan. If the customer’s economic situation is not quite sufficient for a loan, he could hope that he will be given an increased overdraft facility. However, the customer should exercise caution here. In a tight financial situation, a disposition that is used unreasonably could be a debt trap.
If there are only urgent bills that have to be paid or pending urgent repairs, the overdraft facility could be useful. However, the customer should know that the overdraft facility should only be used at short notice. Even with a limited income, the overdraft facility should then be balanced out month after month.
If the customer is healthy again and can start working again, he could also convert the expensive overdraft facility into an installment loan. The bank will see that the income is allocated in the usual high amount, so that it would have to agree to an installment loan.
The loan exception
But a loan in spite of sick pay can also have a chance of success if certain conditions are met. For example, civil servants. These not only have an extended continuation of wages, the job is also safe in the event of illness. As a result, civil servants and civil servants have significantly better credit chances with a loan despite sick pay.
If the illness is such that it is certain that work will resume after recovery, the bank will agree to a loan despite sick pay. Banks see the limitation of loans in the fact that often sick people can no longer continue to work. This ultimately means that the income is reduced. This then raises the question of whether the customer can still pay his installments.
The customer should know that existing loans can continue to be paid without the bank making any changes. Given this, that recovery is not certain, the bank will not approve a loan despite sick pay.
The loan form
A loan despite sickness benefit could also be approved if the loan seeker can name a guarantor. The bank receives the loan protection it needs and the loan seeker can get a comparatively cheap loan. The guarantor then bears the credit risk.
If a guarantor is found, he must be fully informed about the risks of a guarantee. In most cases, banks require a joint and several guarantor, which immediately takes a guarantor back when the borrower stops paying. The guarantor must therefore be solvent, ie his income must be sufficiently high, his Credit bureau must be clean and a permanent job must be available.
A co-applicant would also have the same requirement. He would also secure the loan despite sick pay.
A long illness often brings with it boredom. If the customer then wants to buy a new television, he can finance it through the dealer. For example, if you buy a new television in an electronics store, you only have to enter the name of the employer, and the Credit bureau will also be asked.
Even if you regularly order from mail order companies and have been a customer in one of these stores for a long time, you can order consumer goods without having to check the creditworthiness. If payments were always made on time in the past, the customer can also take out a loan there.
Many customers with poor credit ratings are looking for a Credit bureau-free loan from abroad. But the customer is not suitable for this, as he receives sick pay that is not paid as income by these banks, since it can only be seized to a limited extent. The prerequisite for these loans is an income that shows a attachable portion.
If the customer does not find a lender and the loan is urgent, they could contact a credit broker. The business of these brokers is to broker loans under difficult conditions. Credit intermediaries know banks that are not so well known and also grant loans in difficult situations.
However, the customer should know that the loan will then become more expensive. Firstly, he will have to count on the loan broker’s commission and secondly, he will receive a loan with an increased interest rate. These loans are advertised with low interest rates, but ultimately creditworthiness counts, which often only brings a loan with really high interest rates.