Millions of people across Australia work low paying jobs. These people are stuck in a vicious cycle. They can’t improve their conditions because they are unable to make a better living. For instance, what if a person wants to start a new business, but no bank is willing to give them a loan since they earn such a low amount each month? Banks and credit lending institutions came under intense scrutiny after the global market crash. As a result of the market crash, governments of different countries introduced a series of reforms in order to streamline the loans process.
Today, it’s not easy to get a loan at all. You will need to show proof of your income, and you also need to make a decent monthly wage before your application is considered. However, what about those with low income? It’s virtually impossible for people earning a lowly wage to get a decent loan to improve their lifestyle or start a new venture. Rather than approaching a bank, a better option would be to visit a private lending institution. Private lending institutions generally offer low-income loans at different interest rates than the market.
Since the loans are targeted towards people who already make a very limited amount, the repayment schedule is quite flexible. You don’t need to make a large payment each month. Private lending institutions generally create flexible and convenient payment schedules in order to make it easy for people with low income to pay off loans without having to compromise on their basic needs. If you are unable to pay the loan, your credit score will be affected. Since the company is taking on a considerable amount of risk by granting loans to low-income people in the first place, they will also require some sort of security or collateral.
Failure to pay the loan on time will mean that the company will take possession of the security. Therefore, before you sign up for a loan, it’s important that you discuss all the terms and conditions with the company. The interest rates for such loans are quite different than what you would expect from the market. Since these loans are granted by private lending institutions, the interest rates are set based on the amount of risk that the company is taking.
Taking a loan designed specifically for low-income individuals could actually work in your favour. You could easily pay off the loan amount without having to use a considerable chunk of your salary, while improving your credit score along the way. The loan amount generally varies between $1,000 and $10,000, and the company will ask you about the reasons for the loan before granting it to you. Make sure you read the contract carefully before putting pen to paper. These loans are actually a wise idea for low-income individuals who wish to improve their credit scores without taking on too much credit.