Sickness benefit is given to people who have been on sick leave for several weeks or months and are unable to work. They receive only a small part of the income from the health insurance that they normally receive.
The money is often no longer sufficient to pay current bills, so the financial situation can become very tight. Many banks are visited by customers who want to apply for a loan despite receiving sickness benefits. But banks have a high risk with these people because they cannot guarantee that work can be started again soon. And this is where the problems with the application begin.
No Lending Reasons
Banks shy away from the risk of lending to a person who has been sick for several weeks or months. Nobody can know when the work will start again, so it is also uncertain when the right salary will be earned again. Sickness benefits can be used to pay the bills, but there will hardly be any money left to repay a loan amount. As a result, banks generally do not grant a loan despite receiving sickness benefits. The security of the salary is not given, so that loans are often not granted.
Way out for a loan to be granted
The best would be if the applicant can prove when he can go back to work. Then banks often get a small loan that has to be repaid in a short time. As the credit rating is very poor, the applicant has to try to find collateral to secure the loan. A guarantee that is always accepted is suitable here. It is not easy to find a guarantor, because in an emergency he has to pay the loan installments when the actual borrower is no longer able to do so.
This means that the guarantor also has a high risk. Anyone who names life insurance as their own has a clear advantage. This insurance can either be taken as collateral by the bank or can be mortgaged. The loan is made by the insurance company, which does not always agree to it. A conversation must clarify this.
Only those who provide sufficient security will receive a loan despite receiving sickness benefits. The loan amount will be very low, but can help to pay some bills. If you can, you should refrain from the loan and wait until you can start working again. Then a high loan can be taken out, with which all bills can be paid.