Are you on disability and looking for a loan? There’s nothing shameful about it, especially when you realize you are not alone.
It’s estimated that 48.0 million Americans or 19.4 percent of our population has a disability. There’s also 24.1 million people that have severe disabilities and 34.2 million who have a functional limitation.
Life is more difficult and more expensive with a disability. You spend money you often don’t even have on help and other ways to make your life easier.
So you may be surprised to learn there are options when it comes to loans, and we got your covered. Here’s a guide to loans for people on disability to get you started.
Loans for People on Disability
If you have a disability, on a daily basis you are facing every day challenges the average able-bodied person isn’t even thinking about. One of these challenges could be getting an installment loan.
A loan is a word you hear a lot before you apply for one, you should understand what it means exactly.
A loan is an act of giving money, property or other material goods in exchange for an agreement for future repayment that comes with interest and other financial charges.
A loan can be for a specific, one-time amount, or it can be an open-ended line of credit up to a specified limit or “ceiling amount.”
Loan terms are agreed on by each party before the exchange of any money or property. If the lender asks for “collateral” or something put down as security for repayment on the loan that will be forfeited if there’s a default. Kind of like a loan security deposit.
If collateral is required, this will be outlined in any loan documents. Most loans have provisions for the maximum amount of interest, the length of time before repayment is required, etc.
A common American loan is mortgage or students loans. Loans can come from individuals, corporations, financial institutions and the government. Loans offer a way to grow the overall money supply in our economy and open up a competition to expand businesses.
Loan interest and fees are the main sources of revenue for many financial institutions like banks and even some retailers.
The Process of Getting a Loan
The process of obtaining a loan is actually pretty simple and straightforward. There is actually little difference between how the process works for worthy borrowers and those with disabilities.
First, you must prove that you are eligible for a loan. This means you must be at least 18 years old, have a bank account and have a stable income. This income can come from a permanent employment, if you were recently disabled, perhaps the job you had before your disability, or this can also come from benefits and grants.
Your credit score is also important as this will influence your annual percentage rates or APR’s you attract.
You can find out your credit score from either a credit card or loan statement, a non-profit counselor, or for a fee from a credit reporting agency.
You actually have more than one credit score, that’s calculated based on the information from your credit reports. If the information about your credit score is different, lenders will use slightly different credit scores for different types of loans.
Some providers may give you leeway with your creditworthiness. You also may need a certificate of your condition from a government agency or physician.
You may find that lenders are more flexible with your income requirements since you are disabled. They may allow you to include you government benefits with your resources available to pay off your loan. You also can get some leeway with your credit.
Government Funded Programs
There is good news, however. There are three major disability assistant programs. There’s Social Security Disability Insurance (SSDI), for people who are no longer to work because of a disability.
There’s also Supplemental Security Insurance (SSI) which provides low-income people over the age of 65 who are disabled cash benefits. Then for Veterans there the Veterans Administration (VA) benefits.
Do note that in 2007 the Military Authorization Act, banned payday loans that used to be available to men and women on active military duty. This act capped interest charges on loans to 36 percent, instead of it’s 330 plus percent interest rate.
This act does not cover veterans, and payday lenders are often eager to give payday disability loans to veterans receiving VA benefits because checks are virtually granted. If this described your situation, be aware.
You can check out Gov Loans and Disabled World for more information on government-sponsored loans and other financial resources just for people with disabilities. You also may be able to get help from your state, so check that out as well.
There’s also the Virtual CIL (Center for Independent Living) that has a directory of independent living centers in all 50 states.
Depending on your circumstances and situation, you may be able to collect one, two or all three types of these benefits. If you’re not eligible for either, then you might want to look into a loan. Here are the different types of loans available to people with disabilities.
How Loans Affect Government Benefits
It’s important to note that if you are receiving benefits from one of three major federal disability assistance programs: Social Security Disability Insurance (SSDI), Supplemental Security Insurance (SSI) and Veterans Administration (VA) and also receive a loan, this may affect your benefits.
For example, if you are receiving SSI and take out a loan, you have to spend the money the same month you receive it. If you don’t then you have to declare your loan with your assets when you file your monthly report with SSI the following month. For more information, contact your benefits counselor.
Banks & Financial Institution Loans
You can get a special loan from banks and financial institutions to help you with your unique disabled needs. You can use this money to acquire accommodations like stair lifts, vehicle accommodations so that they can drive, special toilets, and showers.
It is important to find out the financial resources for accommodation available through the various government programs. In fact, if you receive funding from a government program before you apply for a loan, find out the financial resources you can use. The money you need could be available for free.
Do note that in most cases, bank loans are the first choice for borrowers as they tend to have the lowest interest rates. Some people might also borrow from their local bank where they know the lending officer and are comfortable with the bank policies.
At the same time, banks can be reluctant to approve loans with people on disability, because the payments can be modest and have to stretch to cover expenses people without disabilities tend to not have.
Loans for Training and Instruction for Disabled Individuals
Loans for disabled people can help finance instruction to help you live your life, and keep some sense of independence. If you are visually or hearing impaired, you could get specialized training in Braille, sign language, or other aides in communication and literacy.
If you have limited mobility, you could get physical therapy to maintain or improve your mobility. You also could get driving instruction with hand controls to make it possible for you to drive, even though you’re in a wheelchair.
Loans for Support and Caretaking Services
Another way a disabled person can maintain some sort of independence is with support. Loans can help pay for services like cleaning, meal preparation, and repairs around the house. These loans can also be used to pay for personal assistants to help disabled people with their day to day activities
Loans for Specialized Equipment and Household Modifications
You might need to make modifications in your home, to make it easier to get around. There are loans for that that can finance these modifications like adding a ramp to your porch, handrails to your bathtub and toilet, Braille plates on your appliances and hand controls for your car.
Business Loans for the Disabled
Sometimes, people with disabilities can face discrimination and therefore find it difficult to get a job. It also might be difficult for a disabled person to function and operate in a traditional work environment.
This is why often self-employment is one of the most popular job options for people with disabilities. Self-employment provides the financial stability and flexibility disabled people often need to function.
If you want to start your own business, you can contact the Small Business Administration (SBA) for funding, which is an incredible resource for those with disabilities who are looking to be self-employed. They have a ton of national and state resources (also loans) for disabled entrepreneurs.
Mortgage Loans for Disabled Home Buyers
Depending on your disability, you may qualify for accommodations when you look for a mortgage. The National Association of Realtors, for example, has a page in their Realtor Magazine called Resources for Clients with Disabilities. This page has state programs that have low-interest mortgages for disabled home buyers.
Also, note that mortgage lenders cannot place restrictions on you refusing to lend because you have a disability. Talk with your housing counselor to find out what your loan options are today.
There are also loans from private providers. This can include installment loans and payday loans that can give you quick cash for emergencies, such as medical ones.
Most borrowers do prefer installment loans because they tend to offer better terms, like long-term loans and a more competitive APR.
Avoid the Payday Loan Trap
With payday loans, you also want to make sure you avoid the payday loan trap. You might find this when you search online for loans for disabled individuals. These loans tend to favor individuals who receive disability payments because it’s a reliable source of income.
Beware of phrases like “cash in 24 hours” “no faxing” and “poor credit accepted.” These are red flags that mean you could be dealing with a payday lender instead of a legitimate installment lender.
Look for a lender that is going to consider your entire financial picture and not just your income. A company that will work with you to help you pay off your loan and get better credit, instead of getting you trapped in an endless cycle of payday loan rollovers, which can keep you in debt for life.
Get That Loan You Deserve
Now that you have the lowdown and all the information needed to get that loans for people on disability, go apply for that loan you deserve.
Be sure to do your research first to find out if your loan will affect your government benefits. If you get denied from the bank, which is usually most people’s first choice, know it’s not the end of the world and there are other options out there.
There are a plethora of loan options for every person and situation, especially those that are disabled like yourself. You just have to look and know what’s available to you.
Also, make sure that you can pay off the loan you sign up for so you don’t find yourself to be over your head in debt and payoff balances. Be honest and transparent during your loan search.
Be wary of any loans or cash advances that seem too good to be true. Look into these companies to make sure they are safe and you understand the loan agreement before you sign everything away.
There’s a ton of information and resources on loans for people with disabilities out there. Be sure educate yourself on the loan options available to you, so you can make the right decision with what loan you go for.
For more information, resources and help, know that we are just a click away. Check out our blog for articles and resources to help guide you through your loan journey.