If you cannot work due to a disability, you may qualify for a personal loan, known as a disability loan. With this kind of loan, you may pay for essential, day-to-day costs such as food, bills, or mortgage payments. It will take SSA a few months to function your application for disability benefits. In the meantime, you can use these loans as a short-term financing tool to get you through those few months. However, you should not use these loans in place of disability benefits.
Who Qualifies For A Disability Loan?
Because a disability loan is a personal loan, the lender will determine acceptance in addition to your previous credit history. The criteria for qualification will differ from one lending institution to the next. Suppose you need help to fulfill the standards. In that case, most lenders will allow you to apply with a co-signer to improve your chances of being approved. Your credit history will also play a role in determining your interest rate; hence, the higher your credit score, the more favorable your interest rate will be.
Unlike disability benefits, disability loans are not handled by the Social Security Administration (SSA). Private lenders are the ones that handle the application process for disability loans. As a result, you should only get one if it's an absolute last choice, and even then, only if you have a strategy for paying back the money you borrow. It is important to remember that depending on disability benefits to pay off your loan is not the smartest choice since the government has the authority to reject your claim.
How to Apply For a Disability Loan
You may apply for loans for people with disability via an online lender, a traditional bank, or a credit union. The application procedure is often carried out entirely online when working with an online lender. This makes working with an online lender; one of the quickest and simplest ways to get the cash you want. On the other hand, if you are a credit union member or have done business with a certain bank, you should check to see whether that bank or credit union provides its clients with lower fees or rates.
Before applying for loans for people on disability, shop around for several lenders to see which one can provide you with the best terms for your current circumstances. Avoid a harsh credit check on a loan that you might not qualify for by using the pre-qualification tools now offered by many online lenders. These programs let you check whether you match the eligibility standards before applying for the loan.
The Benefits and Drawbacks of Disability Loans
Even though getting any emergency loan might be a helpful method to receive the cash you need when you need it rapidly, you still need to be aware of the potential negatives before asking for one.
Pros
Convenience: You could be accepted for a loan in a matter of minutes by some lenders, and you might be able to finish the full application process without leaving your house.
Options: When acquiring a loan that meets your needs, you have various financial institutions, such as banks and credit unions, from which to pick.
Cons
High-interest rates: Depending on the state of your credit, you could be forced to settle for a high rate, which might set you up for future debt with a high-interest rate.
Payday risk: People with disabilities are targeted by the marketing of many types of loans, including payday loans; however, these loans generally come with very high-interest rates that may put you in debt for many years.
Short repayment terms: Depending on the lender, you could be offered a shorter payback duration; this would imply that your monthly payment would be higher even though the repayment term would be shorter than it would be for other kinds of debt.
Alternatives to a Disability Loan
Other options are available to assist pay the processing period of your disability claim if you don't match the qualifying standards or don't want to take out a loan with a long-term commitment.
Disability insurance
If you become incapacitated and unable to work, disability insurance will compensate you for a percentage of your lost income. There is short-term and long-term coverage, both of which come with varying levels of coverage and lengths of waiting periods. You could be eligible to enroll in a plan that your employer offers, or you might be able to purchase an individual plan through a broker or an insurance company.
