In the case of a so-called Social Welfare credit, recipients of social benefits, in this case unemployment benefit 2, are also to be given the opportunity to extend their financial leeway through a loan.
Where do you get a Social Welfare?
The loan itself is based on the interest rate but also on the amount of the often difficult life situation of recipients of social benefits. This is to prevent a financial overload, which could ultimately lead to the rates can no longer be paid. Especially with its own house bank, it is hardly possible to get a Social Welfare credit, since the framework for loans do not fit the income situation of Social Welfare recipients.
What should be considered during the application process?
Of course, when applying for a loan broker you should pay attention to a few points. So should never go in the loan request in advance. This is the first sign that it is a dubious mediator.
Expiry of borrowing
How does the placement of a Social Welfare loan proceed? When mediating over the Internet, the personal route to the bank and a so-called credit interview are canceled. All documents and necessary information will be sent either online via the postal service. Also a Credit bureau information is not necessary. To get a Social Welfare credit only has to be proven that you have a low income.
Here a copy of the current approval notice is sufficient. Furthermore, one must be of legal age and have his residence in Germany. Also, the payout is only on a German bank account.
What else is there to consider?
There is also another benefit for recipients of social benefits here. In many cases, it may be necessary to take a break for advice once a year. This deferment is attached after the loan amount. This is a great advantage if the utility bill is due, or the car is defective at short notice.
If the Social Welfare credit with all relevant documents online is requested, a payment within 24 hours is possible. On special request, the money can also be picked up in cash at any bank.
5 tips for credit despite Social Welfare
1. How can I get a loan with Social Welfare?
People who receive GAL II have a hard time getting credit in Germany. As a rule, banks do not allocate sums of money despite a perfect Credit bureau. The risk of failure due to failure to pay by installments is far too great. But who has a solvent guarantor in the family or in the circle of friends, can fall back on this.
2. These documents must be available
As an GAL II beneficiary there is usually no employment contract. Therefore, other documents must be provided to prove the possibility of installment payments. Thus, the submission of a motor vehicle letter for a vehicle with equivalent value can be required. For other securities, of course, evidence of their existence must be provided.
3. Where can I find loans for GAL II recipients?
Loans of this kind can usually only be found through credit intermediaries. Hardly a regular bank has a corresponding offer in the portfolio, although there are usually various options on demand “backwards”. However, for this purpose, an accredited institute must mediate, which gives the bank appropriate assurances.
4. Tips on the subject of guarantors
Anyone wishing to apply for a Social Welfare loan with a guarantor must first and foremost be sure that they have the required credit rating. But this alone is not enough, because with the signing of the contract, a community is created, which obligates the other part inevitably, the liabilities in the event of late payment to take over. Therefore, between the guarantor and the borrower, for legal reasons alone, a contract should be concluded on the repayment procedure and the detailed terms of the guarantee.
5. Remaining debt insurance – sometimes unavoidable
If a loan from a regular bank is really possible, it can be demanded here that a residual debt insurance is taken out. If a corresponding offer is made, this should also be accepted. Despite the slightly higher costs, it is often the only way to get a normal installment loan or auto finance as an GAL II receiver. However, caution should be exercised when credit intermediaries on the Internet demand the conclusion of such insurance in advance.
Requirements for a loan despite Social Welfare
In spite of Social Welfare, most banks can easily take out a loan if, as Social Welfare beneficiaries, they fulfill certain requirements for applying for a loan despite Social Welfare. These requirements include first and foremost a sufficient credit rating. Anyone who has a credit despite Social Welfare can achieve a corresponding credit rating, for example, by proving assets.Depending on the amount of credit required, this is also possible within the statutory exemption limits for private assets of Social Welfare recipients.
Good credit rating is crucial
For many banks, the credit rating does not only result from the current income, the wealth situation and the question of whether a guarantor will be found or not. Equally crucial for most banks is whether, in the case of a loan despite Social Welfare, the borrower has information about a positive Credit bureau or not.
Rate burden on credit despite Social Welfare keep low
Already due to the low income, the Social Welfare recipients generally refer to, should be in terms of credit despite Social Welfare generally on rather longer maturities and keep the burden of monthly loan payments as low as possible. This is the easiest way to ensure the long-term sustainability of the extra financial burden of the loan, despite Social Welfare. However, most banks will be pushing for the lowest possible monthly installment anyway, since a loan default is not desirable for any of the parties involved.
Conditions for credit despite Social Welfare only slightly worse
Although most banks in Social Welfare recipients do not see the ideal customers, the conditions for a loan despite Social Welfare are usually not much worse than conventional loans. Thus, most Social Welfare recipients can benefit from the very favorable conditions in the current interest rate low. Two-digit lending rates are therefore also in the case of credit despite Social Welfare fit in most cases.
Stay flexible with special repayment options
Anyone wishing to return to work in the foreseeable future, expecting an inheritance or expecting a change in the overall financial situation for other reasons should agree on the best possible repayment possibilities with their bank. Thus one is much faster debt-free with an improvement of the situation than if the regular loan purchase time is waited, which is in the credit despite Social Welfare usually quite long.