Debt consolidation loans for low-income earners can help families lower their monthly payments – if the lender approves the application. It may prove very difficult to qualify, especially if you have bad credit.
The amount of money you earn every month is a key component that lenders evaluate. You must be able to show that your future wages are sufficient to handle your projected monthly payment, plus regular living expenses.
Do not give up hope. There are alternatives, and some subprime lenders may approve small requests. You may find that a settlement company offers the best solution. Alternatively, federal government programs that provide financial assistance for low-income families may help reduce other expenses.
Debt Consolidation Loans Bad Credit Low Income
Debt consolidation loans for bad credit low-income earners may not be very realistic. You have two strikes against you before you apply. Your odds of qualifying are very low. Lenders look primarily at your previous borrowing history and the amount of money you are likely to earn in the future.
Free debt consolidation quote. If you owe more than $10,000 on your credit cards, a relief program may be a more realistic option compared to finding a lender willing to approve your application.
Qualifying for a debt consolidation loan with bad credit history is very difficult by itself. Most lenders will pull a copy of your consumer report, and consider your risk score. People with low ratings rarely meet eligibility criteria for unsecured accounts.
People with poor credit ratings may qualify for loans that do not require a consumer report pull. However, the two primary options are not a great fit for debt consolidation for most low-income earners.
- Payday cash advances often do not require a report pull. However, the principal amounts are far too small and the repayment timeframe is much too short.
- Automobile title loans often do not require a report pull. However, you must own clear title on your car. In addition, the vehicle must have an appraisal value well above your target principal amount.
Lower monthly payments are the primary benefit of a debt consolidation loan. Unfortunately, this goal may be unrealistic with these two options.
Qualifying for a debt consolidation loan when you are a low-income earner is also very difficult by itself. Most lenders want to see applicants with solid job histories, and enough money coming in every month to cover everyday living expenses, plus repayment of your outstanding obligations.
A high debt to income ratio (DTI) scares many lenders away. Calculate your DTI by dividing your monthly debt service payments by your monthly income. The lower your monthly income is, the higher your DTI. People with bad credit often owe large amounts of money, which compounds the problem.
Debt Consolidation Loans Low-Income Families
Debt consolidation loans for low-income families may help you lower your monthly payment by extending the amount of time you have to return the funds. It does not eliminate or lower the amount of money you owe. You may or may not wind up paying a lower interest rate. However, you may pay more in total interest over time, because you are using another person’s money for longer.
Apply for a debt consolidation loan if your family owes a relatively small amount. Be sure to include your household income if both spouses are working to improve your odds of approval.
Debt consolidation services are an alternative solution for low-income families. It is very hard to get ahead of your monthly payments with insufficient wages coming in. In many cases, the interest charges just continue to grow and grow.
Rather than combining your obligations, work with a company that may be able to reduce what you owe. Their service is slightly different. They negotiate on your behalf to reach a debt reduction settlement. If you owe more than $10,000, you may qualify for the service.
Unlike with many government programs, there are no special guidelines for low-income families applying for debt consolidation loans. Private lenders are not charitable organizations. Nor does the government compel them to make special considerations for target populations.
You must meet eligibility criteria like any other applicant. Your consumer report must show a history of responsible on-time payment of your obligations, and you must demonstrate that you have sufficient future wages to cover your monthly payments and other living expenses.
You may be able to improve your cash flow by cutting expenses in other areas. Many federal government-sponsored programs utilize low-income guidelines to provide financial assistance. Similar programs may also exist and the state and county levels.
If you cannot increase what your family earns in order to qualify for a debt consolidation loan, you may be able to decrease what you spend.
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