Loans can be applied for a wide variety of purposes. In most cases, a loan is used to buy consumer goods, vacation trips, renovations, to buy a car or to reschedule. But in many cases a loan is refused. The reasons do not necessarily have to be creditworthiness, because primarily the employment relationship and the corresponding income are decisive for a loan approval or loan cancellation.
It is particularly difficult for bank customers who only have a temporary job. In these cases, the loan request is often rejected, even if the money is still urgently needed, such as for the purchase of a car. But even in the case of receiving sickness benefits, it can be difficult with the loan approval. But what does a sickness benefit actually mean?
Credit despite receiving sickness benefits – is that possible?
Banks have guidelines for lending that they strictly adhere to. If a bank customer comes and wants to have a loan, a rejection is preprogrammed if he does not meet the guidelines. Even a positive Credit Bureau information is of no use. The best example is receiving sickness benefit. In the event of illness, an employee receives continued wages from his employer for at least six weeks. In some cases, this can even be as long as six months. But if the illness lasts longer, then the health insurance companies step in. This also means a reduced income, because sickness benefit is lower than income.
Now it is not only the amount of sickness benefit that is important, but also whether the employee can return to his professional life and to the old employer after his illness. The problem is also that some employers quit their employment if the illness lasts too long. In order for a loan to be approved despite receiving sickness benefits, it must be certain in advance that the employment relationship will continue. Under normal circumstances, this is also the case.
Public service worker
Not only civil servants enjoy special status, but also civil servants and workers. It is not only the case that the public employer continues to pay wages for longer, but that such an employment relationship is also secured.
If an employee really gets sick pay from his health insurance company, then it is no problem for the bank to take a positive decision despite receiving sick pay. Termination due to illness that is too long is almost unlikely in the public service. However, this can become a major problem for employees in the private sector.
What to do if there is no employment in the public service?
Those who work in the free economy and receive sick pay should look for another alternative. In these cases, the bank is guaranteed to refuse a loan despite receiving sickness benefits. One possibility is to sell life insurance policies. However, this is only worthwhile if the said life insurance has been running for several years and there is a corresponding surrender value. Friends or family members can also help under these circumstances.
In any case, the justified question arises whether a loan is necessary at all in this uncertain economic situation. If it is foreseeable that the person concerned will no longer be able to pursue his or her job, then he will certainly have other concerns. In the worst case, a disability pension must be applied for and in such a case, a rejection for a loan is almost inevitable despite receiving sickness benefits.