Getting a loan with 1300 USD or 1400 USD net per month is not necessarily a sure-fire success.
Of course, you opened this article to find out what your chances of getting a loan are and what maximum loan amount you can count on.
Whether and how much credit banks lend depends on a number of factors:
The free disposable income of the applicant, how many people the borrower is dependent on and finally how the banks carry out the credit check in individual cases.
Banks rate these and other criteria differently. And no bank publishes its lending guidelines.
Therefore, it cannot be predicted with certainty what the credit options ultimately look like with a salary of 1300 to 1400 net. Certainty only brings a specific loan request.
However, an estimate of the maximum loan amount is possible and can serve as a good preparation for the loan request and the sometimes subsequent negotiations.
Budget bill and disposable income
This chapter deals with the question of how much credit you can afford at around 1300 USD net per month.
It’s more a question you should ask yourself. Of course, the bank is also interested in your economic performance before granting a loan.
But the criteria for the assessment need not be the same.
The freely disposable income with which the loan rate can be shouldered is determined by a household bill.
All income and expenses are recorded and compared on a monthly basis. If no budget book is kept (who does it), an estimate as accurate as possible is sufficient.
Free household calculators are available on the Internet like sand by the sea. We prefer the calculator with the Responsibility website.
Some expenses do not occur monthly, but in longer time intervals, for example quarterly or annually. You have to convert this expenditure to the month.
If there is a surplus of income over expenditure, you have freely disposable income with which, from an economic point of view, you can pay the monthly installment for the loan.
Another method is to estimate the possible monthly rate using a rule of thumb. For example, free installment loans are often based on 20% of the monthly net income.
At 1300 USD net monthly this is 260 USD and at 1400 USD monthly 280 USD.
However, your budget bill using the suggested form and the rest of this article will show you that these lump sums are usually too high.
The stumbling block: the attachable income
In contrast to earmarked loans, the usual installment loans have no further collateral apart from the salary assignment.
Even if you offer additional collateral, these offers are often not even accepted. The reason lies in the effort that additional collateral brings for the credit institution.
The proportion of income that can be seized depends on the number of maintenance obligations that you have to fulfill. As a rule, this concerns children who are subject to maintenance.
A screenshot from the attachment table shows at a glance the attachable share of the salary.
At $ 1300 to $ 1400 net per month, salary shares can only be attached if no maintenance obligations are to be met.
Banks do not necessarily expect the agreed monthly loan installment to be fully covered by the attachable salary component.
It is more problematic if the total monthly income is below the absolute garnishment exemption limit of approximately 1180.
Even then, some banks still agree to issue smaller loans.
As a borrower, however, consider the garnishment table with the garnishment-free wage components.
Legislators have declared part of the wage to be attachable so that consumers receive a minimum amount to support themselves.
If you use income that is supposed to secure your basic needs to settle credit installments, you can get into a debt trap.
So be careful with borrowing if the monthly installments cannot be largely paid off from the wage shares subject to the attachment.
What loan amounts are realistic?
The amount of credit that can be calculated without taking individual credit rating characteristics into account depends on three requirements:
- The selected term.
- The free income available for the monthly payment.
- The effective annual interest rates.
For the following example calculations, we assume that the applicant has no maintenance obligations.
If the income is 1300 USD per month, we assume a rate of 120 USD.
If the income is 1400 USD per month, the possible credit rate should be 190 USD.
We use a few tools to carry out the sample calculations quickly.
How much credit does the bank give?
The amount of credit actually granted by a bank can vary significantly from the sample calculations. There are several reasons for this.
The interest rates depend not only on the term, but also on the creditworthiness, which is determined according to the bank’s lending guidelines.
Interest rates can therefore be lower than the average interest rates or even higher.
The effective annual interest rates always depend on the credit rating of the credit customer.
This also applies if fixed interest is offered, i.e. interest independent of creditworthiness. In these cases there is a limit credit rating.
The advertised interest rate is only offered if a certain credit rating level, often defined by a score, is not undershot.
If the credit rating level of the relevant bank falls below the level, the applicant either receives no credit from the bank at all or higher interest rates are charged.
The credit check does not only take into account freely disposable income. The credit default risk is of great importance.
In order to be able to assess this risk, banks obtain information from various credit bureaus.
The most famous credit agency in Germany is Credit bureau. Credit bureau determines various score values with which the credit default risk is limited.
In addition, personal relationships such as civil status and job security also play a role.
It also depends on which loan option is being applied for. Different guidelines apply to real estate financing secured by real estate than to an all-purpose loan for free use.
The bank can use the financed vehicle as collateral for car loans. Dedicated auto loans always require the vehicle to be assigned as security. For this reason, less stringent requirements regarding personal creditworthiness can apply.
The same can apply to financed purchases. When buying in installments, the purchased item is often assigned as security. The loan amounts are also relatively low.
Some banks have general rules on maximum loan amounts. For example, normal non-earmarked installment loans are only granted up to ten times the monthly net income.
With 1300 USD net this would be 13,000 USD and with 1400 USD net 14,000 USD.
Finally, banks can use lump sums for the household bill. For the first person in a household, for example, an amount of 600 USD or 800 USD is set, for each additional person an additional 200 USD.
Favorable credit terms through comparison
How much credit you actually get on what terms, depends on the specific loan offers of the banks.
The offers can be quite different because the banks follow different guidelines when granting loans.
One bank may fully meet your loan request, while another bank is only willing to offer a significantly lower loan amount and also charges higher interest rates.
Of course, you can submit individual loan applications to five or ten direct banks and then laboriously compare the results.