Apply for a loan despite receiving sickness benefits
Many situations in life require people to improve their financial situation with the help of a loan. As a rule, one point is always of enormous importance when applying for such a loan. The borrower should have a secured regular income so that he can guarantee the repayment of the loan. As long as this income is obtained through a professional activity, it is also not difficult. However, there are also incomes that lenders do not like so much and then it can get complicated with the loan application.
Loan application for sickness benefit
For most banks, those who are in permanent employment are initially considered creditworthy. However, if the employee is ill for a longer period of time (longer than 6 weeks), then the income drops significantly. In addition, the payment of sickness benefit by the health insurance company is a continued payment of wages, but it also represents a social benefit. The potential borrower thus has an income that can usually not be attached.
In an emergency, the bank could not access this income if there were any discrepancies in the repayment of the loan. In addition, when receiving sickness benefit, it can be assumed that the employee’s illness is a more serious one. That is not exactly a plus point for creditworthiness either.
Certain cases are quite possible
The offer for a loan with sick pay is not exactly abundant. In these cases, the personal loan is very often a solution or the loan from your own bank. After all, the borrower is well known there and can therefore also be better assessed by the responsible clerk. But there are also other areas where such a loan can be granted. In this way, the loans are available in installments when the goods are purchased, even if the borrower has been out of the race for some time. Even with larger purchases, such as a car, the loan can also be granted with sick pay. This is primarily due to the fact that the bank has additional security here by car.
As part of the transfer by way of security, the bank secures the ownership rights to the vehicle until the loan has been repaid in full. All of these provisions only apply in the event that someone is already receiving sick pay and then wants to apply for a loan. If the loan already exists, then receiving sickness benefits cannot have a disadvantage. This is where residual debt insurance often comes into play, which many lenders offer their customers.
It’s worth comparing
A comparison is also a very good alternative in the case of loans with sick pay. This enables a borrower to get an overview of how the individual conditions are with the relevant providers. In this way, you can quickly save a few USD if you pay attention to look for the cheapest offer.
Before applying for a loan, however, you should also check whether you can apply for the loan at a later date. Perhaps the time for receiving sickness benefits will then be over and regular wages will be paid again. That would make many things easier and would also increase the possibilities.