Combine several loans into one to lighten the burden of monthly payments, is it possible for everyone? With a low salary, is it possible to request a consolidation with the banks? Yes. Your income is important, but it is not the only criterion observed. We detail for you the essential criteria, and the importance of your salary.
Benefit from a loan buy-back even with a small salary
For a loan buy-back to be implemented, many criteria are scrutinized by banking organizations. These will begin in particular by listing your cash inflows and your expenses, in order to define your debt ratio.
Debt ratio = (total borrowings) × 100 ÷ (total net income)
With this debt ratio, and depending on your situation (savings, income), then a financial organization can make you a proposal to restructure your debts, using a group of loans. The use rate of 33% is often cited as the reference rate below which it is important to be.
It is not a statutory rate (it is possible to borrow even with a higher debt ratio) but a target rate to have in mind. To reach it is it essential to have a significant salary? No. It is possible to carry out a grouping of loans even with a low salary (with a contract which takes up the legal hourly minimum wage), or even without salary!
- If you have a low income, but your credits are proportional to these incomes, then a deleveraging thanks to the restructuring of your credits is possible. Even people with reduced wages, more than 100% indebted, can find a solution;
- If you have a reduced activity (80%, half-time) or that you work sporadically (interim type contracts or even self-employed), the operation is possible. Again, the full study of your file, and in particular your income from the last few months, will allow the credit organization to judge the feasibility of your file;
- If you are a couple, know that the income taken into account is that of the borrower and that of the co-borrower. Therefore declare your two incomes, and carry out the operation in couple, so that the request succeeds;
- You may have only pensions and allowances as your only source of income. This money counts as income, fixed or temporary. It will be assessed in the case of a loan buy-back.
We understand it with these different situations, beyond income, it is the debt ratio and therefore the share of expenses in relation to income which is evaluated.
Having a small, but regular salary, an asset for buying back credits
When carrying out a loan buy-back simulation, it is common to see that a person or a couple with low wages can ultimately find themselves in a favorable position. Why ?
- Because income from alimony or allowances is taken into account, and is added to your basic income. A minimum wage, associated with these aids, can therefore turn into sufficient income to limit your debt ratio;
- Even a low salary, the result of stable work, is an asset in building a file. Indeed, the recurrence of income is an important criterion, the banks seeking to avoid the risk of non-payment. If your salary is low, but you are on a permanent contract, the bank will be reassured;
- This observation on the recurrence of wages also works for aid and pensions. Support payments or a specific allowance can be recurring income for several years. In this case, the credit organization will be able to assess it and integrate it into its calculation.
Having a low salary is not necessarily a handicap to achieve a reunification. Do not focus only on this criterion.
Watch all the other aspects: present a file without direct debits or rejected payments on your account, and show your desire to get out of this difficult situation. Our Capital Lender advisers are at your disposal to help you in all the steps.