The car loan for Hartz 4 recipients can be used to finance a new or used car, although due to the limited financial options of the Hartz 4 recipient, a used car is advisable. Taking out the loan can be very complicated because a Hartz 4 recipient has very limited creditworthiness, which is why many banks generally reject unemployed people. See http://handsofkali.com/safe-car-loans-for-bad-credit-need-cash-now-bad-credit-for-car-loan/ for an example
Car loa in sufficient installment
The funds received from the Hartz 4 payments are generally not sufficient to make monthly installments in installments, which is why there is a risk of over-indebtedness if you take out a loan. Therefore, those affected should think very carefully about whether a new car should actually be purchased at the current time, i.e. during unemployment. In large cities in particular, the connection via public transport is very good, which is why a car is hardly necessary.
In addition, of course, not only is the amount due for the purchase itself, but running costs must also be covered in sufficient form. This includes insurance, regular inspections and repairs and, of course, the gasoline costs. The car loan for Hartz 4 recipients should therefore also be somewhat higher, so that the additional costs incurred do not overload the first few months. But all of this is almost obsolete, even if there is no way out of unemployment in the future.
Social benefits are not enough to repay loans
The transfer services contained in the Hartz 4 generally do not offer any freedom in order to be able to pay additional installments. A rejection by the banks is therefore well founded, although exceptional cases are also known. It is important for Hartz 4 recipients that the borrower can provide a guarantee or a co-applicant. This increases the creditworthiness of the actual borrower and in many cases makes the loan possible in the first place.
It is also helpful if evidence can be provided that the automobile is needed for a job and that it is only issued if the borrower also drives his own automobile. Many jobs nowadays not only require a driver’s license, but also your own car, which is why this occurs more often than you would initially expect.
The car loan for Hartz 4 recipients should also be carefully considered in terms of the type of financing, because in addition to classic balloon financing, there is also the possibility of a leasing contract, for example. Regardless of the exact nature of the loan, the providers should always be compared in detail in order to actually get the best conditions for borrowing.