Americans who live day-to-day on disability payments---either through the government or private funding---often face serious financial challenges. In many cases, a disability check is not enough to cover basic living expenses, and additional funds are required. Finding loans and financing while on disability can be difficult, but is indeed possible.
Qualifications
Most major lenders, like banks, carefully scrutinize a borrower's ability to repay a loan. This is done in a variety of ways, but the debt-to-income ratio (DIR) is one of the more popular methods. To make this calculation, the lender divides all of the borrower's monthly expenses (including the proposed loan amount) by the gross monthly income on the person's paycheck. Most banks do not want to lend to anyone with a DIR ratio higher than 35%.
SSI and Disability Checks
For many of those on disability, the first stumbling block is income verification. Most banks will not consider Supplemental Security Income (SSI), the funds often used to make disability payments, as a verifiable income source. Some banks do work with "additional income" programs that accept SSI payments. However, these programs normally require a borrower to have at least some verifiable income that can be documented with a paycheck.
Finance Companies
Borrowers on disability should apply at finance companies like Wells Fargo Financial, CitiFinancial, and HSBC Financial. These companies are offshoots of major banking institutions and often cater to borrowers with nontraditional credit criteria. They often lend to those with poor credit as well as those with unusual income sources. While these companies are not guaranteed to accept SSI and disability payments as income sources, they're more willing to consider them than banks.
Private Loans
Private loans are sponsored and funded without the help of a bank. These are normally small loans made between friends, family members, and colleagues. Because they can drive wedges between people, they're not recommended. However, if you do decide to take on a private loan, make sure to hire an attorney to draw up legal paperwork to ensure the loan is legitimate and fair.
PayDay One Loans
Similar to private loans, PayDay One Loans are not recommended for those with good credit (generally considered to be a credit score above 680 FICO). As an alternative, consider a finance company, which a strong FICO score should qualify you for. PayDay One Loans should be a last resort, and used only in desperate times. Also, a PayDay One Loan needs to be paid off as soon as possible. After congressional and legal scrutiny, the PayDay One company was forced to reduce its high rates, but the detrimental effects of these loans are still felt by their borrowers, who often cannot get out of them.
Tags: PayDay Loans, those with, disability payments, income sources, Most banks, verifiable income