May 19, 2022 10:21 pm

How to Get Personal Loans For Low Income Individuals?

Low-income loans are designed to assist individuals who are struggling to make ends meet due to their low salaries. These loans can be used to start small businesses, make down payments o homes or take care of overwhelming old debts. The US government every year designates millions of dollars to assist needy individuals and come in the form of grants and soft loans. Most of these government loans attract minimal interest rates and as for grants, these do not have to be repaid. However to qualify for these loans, individuals must prove their need. There are other sources of low-income personal loans such as:

Low Income Loans from traditional banks

Most individuals who qualify for low income personal loans either do not have a steady job or earn salaries at the minimum wage level. As a result, banking institutions who offer low-income personal loans require them to provide a co-borrower or co-signer who will guarantee the loan on the borrower’s behalf. This is to ensure that the borrower will live up to their financial commitments and pay back the loan. Individuals should however take care when seeking personal loans from traditional banks. This because these loans are treated as high-risk loans and thus attracts exorbitant interest rates.

Micro financing: Over the micro financing has grown into one of the most popular forms of personal low-income financing. This form of banking is most popular among developing nations and have now found its way into most developed countries amongst the poor. Under this model, individuals are afforded small start-up loans of a few thousand dollars to start a business or take care of other pressing issues. Qualification for more loans is hinged on how the first loan was managed. Once it has been established that you are a responsible borrower and then permission can be granted for increased sums, this increased sum can be used to expand businesses.

Credit Unions: Credit unions exist to provide financial assistance to all its members. This corporative is owned and operated by its members. These members appoint a management team who will oversee all the affairs and design loan schemes to accommodate their needs. As a result, low-income personal loans gained from credit unions have interest rates that rival those offered under government low-income loan programs.

To qualify for these low-income loans, borrowers must first be a member. The type of interest rate attached to the loan depends on if the loan amount exceed the amount held in the borrower’s account. However, regardless of the final rate agreed, it will not be burdensome to the borrower as all loans are agreed upon within the mandate of providing affordable loans for its members

Payday Loans: These are personal loans offered to low income earners to meet immediate financial obligations. With over 23,000 payday lending outlets across America, this industry has grown into a $30 billion dollar business. Under this model, low-income borrowers can borrow small loans of $300 to $1000 for a fee starting at $45 based on the amount being borrowed. This amount must be repaid on the borrowers next payday. Some payday lenders will require some form of collateral whether physical or other wise to ensure the loan is repaid

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