Loan Help for People on Social Security
If you are on Social Security, you have likely had some trouble finding a lender that can work with your financial situation. Most people receiving Social Security on a low, fixed income, and many institutions filter such borrowers out. However, that doesn’t mean you can’t qualify for a loan when the need arises; you’ll just have to do extra work to prove you are a worthy borrower and can reasonably be expected to meet the repayment terms. Here’s what you need to know.
Assess Your Available Income Streams
Before applying for any loan, you need to have a full understanding of your income. First, you can review your Social Security benefit statements to see exactly how much you get on a monthly basis. If you receive Supplemental Security Income (SSI) along with your Social Security payment, make sure to include that amount. You can also add in any money received from a retirement account if you are currently withdrawing funds.
If you are on Social Security but do not receive SSI at this time, you might want to see if you are eligible for these payments. Not everyone qualifies, but those that do can get additional money every month, possibly making a loan unnecessary or making it easier to secure one when you do apply.
In addition to SSI, check out these FAQs on social security which may help answer more questions around getting a loan whiles on social security.
For those that are just in need of a loan and not ongoing financial assistance, below are options to consider for securing a loans. You can also learn more about actual loans options for those collecting benefits here.
Check Your Credit Score
Regardless of your source of income, your credit score plays a large role in whether you can secure a loan. Before applying, review your credit reports for errors and check your scores. This will give you an idea of whether a particular lender is likely to approve you in advance.
Start with Your Bank
A large number of financial institutions offer loan products that they don’t publicly advertise. Contact your bank directly and request additional information on products that may be suitable for a person in your situation. They will be able to let you know if a suitable option may be available, and may be more likely to approve you since your Social Security checks are deposited into an account with them or based on the length of your relationship with the institution.
Sometimes, it is easier to get approved for a loan if you can provide collateral. If you own a home, you may be able to use the equity to support your request. Some banks will also consider vehicles as collateral as long as they have enough value.
Just keep in mind that anything offered as collateral can be seized by the lender if you fail to make your debt payments, so only go this route if you are confident you can repay the funds.
Another way to secure a loan may involve finding a cosigner. This is someone you know who is willing also to be associated with the loan. This allows the other person’s income to be factored into the bank’s decision, making it easier to qualify. Be aware that failing to make your payments will not just hurt you, but your cosigner as well. Additionally, it affects both of your credit histories and scores. Only enter into this arrangement if you’re certain you can repay the loan. Otherwise, the consequences can affect your relationship as well as your credit.
Other options, like peer-to-peer lending or borrowing money from friends or family members, may also be suitable, but those listed above might be your best bet if your income is highly limited.