People with disabilities have the right to receive financial assistance from the state, but it is no secret to anyone that these payments are often not enough. Lack of money pushes people to get loans and borrowings.
A loan agreement has no clauses on clarifying the health of the borrower. But when applying for a large amount, the loan officer will certainly pay attention to this. Indeed, in this case, long-term cooperation is planned, and poor health cannot guarantee this. Alas, the chances of approval are diminishing. According to the bank, disability promises high risks of non-refund.
The bank will ask you to provide pay stubs from the last 30 days and W-2s or I-9s from the past 2 years to confirm your solvency. In addition to wages, pensions, income from dividends, shares, and renting out real estate are allowed as income. Benefits and scholarships are also considered a person’s income. It seems that banks, on the contrary, should encourage such borrowers because those persons who have officially formalized state material assistance have a constant monthly income. But the problem lies in the fact that its amount rarely exceeds the average salary.
Types of loans that people with disabilities can apply for
A disabled person’s loan is usually issued in a small amount if there is a stable income, as well as a guarantor or collateral.
So, disabled people have access to:
- Consumer loans are loans given to consumers to finance specific types of expenditures. The most popular consumer installment loan products are mortgages, student loans, auto loans and personal loans.
- Payday loans are short-term, small-dollar loans that can help you cover immediate cash needs until you get your next paycheck. Such loans are the easiest to access as they are purely online, have relaxed borrower requirements and do not check your credit. Loans amounts typically range from $100 and $1,000. Applying for online payday loans Delaware is free and simple. Direct lenders offer a variety of options with different rates and repayment terms;
- Credit cards are small plastic or metal cards issued by a financial company. It allows you to make purchases by borrowing money up to an established limit;
- Secured loans are loans backed by collateral (for example, real estate secured loans, auto title loans). Lenders accept collateral against a secured loan to incentivize borrowers to repay the loan on time.
You should bear in mind that there are no preferential programs, contracts are drawn up on general terms. At the same time, banks pay more attention to the solvency of such clients since they have additional expenses each month – regular treatment.
Reasons you can be rejected for disability loans
The reasons why banks are dubious about people with disabilities are equal to the reasons why they refuse loans to retirees: a precarious state of health does not guarantee debt repayment. Banks have the right to refuse a loan without explanation. But you should not think that all loans are refused due to disability because there are general requirements that are equal for all citizens: legal age, US citizenship or permanent residence permit and working capacity. If you meet all the conditions, then your application may have been rejected for the following reasons:
- full or limited legal capacity. The bank takes a serious risk by concluding an agreement with such a client, because in case of non-payment and subsequent litigation, the debt may be recognized as hopeless and not returned, and the loan agreement may be terminated;
- full or partial work capacity. There is some doubt due to health problems. Suddenly, under unforeseen circumstances, a potential borrower will not be able to provide him-/herself with a full income and pay mandatory payments;
- small income. Financial assistance or a pension does not cover all the expenses of a sick person. There may be situations when a deterioration in well-being will force you to buy some drugs and spend money intended to pay off the debt.
How to increase the chances of getting a disability loan??
If you are denied a loan, we recommend that you analyze your chances and possibly, make attempts to change some of the dubious factors. How to improve the performance for loan approval?
- reliable guarantors (wealthy relatives or friends) will inspire confidence in loan officers, and the bank will have no doubt that in case of unforeseen circumstances you will be able to pay the required amount with the help of a guarantor. We advise you to invite the guarantor to the bank with you when submitting an application. You will need to bring along documents confirming the guarantor’s solvency;
- the employer has the right to act as a surety. Hiring in a large company that treats employee concerns with understanding will also be an advantage;
- ownership of property. A car or real estate is a suitable collateral for a loan. But do not forget that the only housing of a person with a disability cannot be indicated as collateral;
- health and life insurance will play a positive role in your approval. The bank will be confident in the return of its funds in case of deterioration of health or death of the client;
- also, you can insure your financial situation or take out loan insurance and be able to repay the mandatory payment in any situation;
- you can also take out a voluntary insurance policy that will cover your costs for the purchase of drugs, which will reduce costs.
Why take out disability loans from microfinance institutions?
The main feature of loans from MFI is high approval rates. MFIs are more loyal to the choice of potential borrowers. Your state of health does not play any role and a disability loan will be issued on a general basis. If you apply for a small loan, the only documents that you will need are a government-issued ID and Social Security Number. Of course, there are certain inconveniences – a high daily rate and a short repayment period, but there are also advantages – relaxed eligibility criteria and fast funding. If you are refused a bank loan, we advise you not to give up and seriously consider the option of a payday loan from an MFI. It is also a great option for building credit.