Unemployment and the Hartz 4 reception are not synonymous, even if the public discussion does not always notice the difference. In fact, in spite of an existing employment contract and a low payment, top-ups receive Hartz 4 as a wage supplement, while in the first year of unemployment after a well-paid job, unemployment benefit I is sufficient as a livelihood. Both recipients of unemployment benefit I and Hartz 4 can only borrow under difficult conditions.
Why it is difficult to lend in the event of unemployment or Hartz 4 purchase
Only a few banks grant a loan to Hartz 4 recipients and the unemployed. The understandable reason is that the Hartz 4 benefits are barely sufficient for a living. Since unemployment benefit I has been drawn for a maximum of twelve months, most credit institutions only grant loans to recipients until the entitlement expires. In most cases, however, a loan can be taken out for Hartz 4 recipients and the unemployed if the applicant can provide a surety.
However, the bank must make higher demands on the guarantor’s assets than on a direct borrower so that the guarantee does not become ineffective. The assets required relate to sufficient income or savings as well as sufficient economic knowledge to be able to assess the consequences of a guarantee.
Alternative lending options
Relatives or friends can grant a loan to Hartz 4 recipients and the unemployed without the amount of money being counted as income of the recipient. The prerequisite is that the repayment of the loan is expressly agreed; in other cases, case managers are happy to accept a disguised gift. The repayment of the loan may take significantly longer than with normal bank loans, and the related or friend lender does not have to demand interest from the unemployed or Hartz 4 recipient.
The installment payment agreement with a mail order company is generally accessible as a credit linked to a specific purchase for Hartz 4 recipients and the unemployed, since many retailers do not request income or employment from existing customers or with low invoice amounts. That is why the Hartz 4 recipient or unemployed purchaser is responsible for only making the financial commitments.
If the planned order involves the purchase of urgently needed items, the job center offers itself directly as a point of contact for a required credit for Hartz 4 recipients and unemployed. In this case, anyone who receives Hartz 4 benefits is entitled to interest-free loan payments via their case manager. This agrees with the Hartz 4 recipient in which small installments the loan will be offset against the following benefits.