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A personal loan can be used to cover almost any personal expense, such as debt consolidation, a medical procedure, or an unexpected emergency. However, it can sometimes be difficult to budget for a loan, especially if you have a low income.
While there’s no official definition for what low income entails, it’s generally considered as being lower than the median household income, which was $67,521 for full-time workers in the U.S. as of Sept. 2021, according to the U.S. Census Bureau. This broke down into $61,417 for men and $50,982 for women.
Thankfully, there are several lenders that offer low-income loans — so while borrowing money can be stressful, you might still be able to get the money you need.
Here’s what you should know about low-income loans:
9 reputable low-income lenders
There are some lenders with less stringent income requirements than others. Keep in mind that you’ll still likely need to meet other eligibility criteria to qualify, though — such as having good credit.
Here are Credible’s partner lenders that offer low-interest personal loans to borrowers with low incomes:
What is the minimum income needed for a personal loan?
Each lender sets its own threshold for how much you’ll need to earn to qualify for a personal loan. For example, while LendingPoint requires that you have a yearly income of $20,000, you only need a $12,000 income to potentially qualify with Upstart.
Generally, lenders want to know you’ll be able to afford the new loan.
Lenders also typically have other requirements to determine your eligibility, such as your:
- Credit: You’ll typically need good to excellent credit to qualify for a personal loan — a good credit score is usually considered to be 700 or higher. There are also several lenders that offer personal loans for bad credit, but these loans tend to come with higher interest rates compared to good credit loans.
- Debt-to-income ratio: Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments compared to your income. To be eligible for a personal loan, your DTI ratio should be no higher than 40% — though some lenders might require lower ratios than this.
Keep in mind: Every lender is different — while you might not qualify with one, you could be eligible with another. For example, while many lenders require borrowers to have good credit, you might be able to get a
Every lender is different — while you might not qualify with one, you could be eligible with another. For example, while many lenders require borrowers to have good credit, you might be able to get a personal loan with a 550 credit score with others.
This is why it’s important to compare as many lenders as possible to find the right loan for your needs.
Regardless of whether you qualify, make sure you’ll be able to keep up with your loan payments before you borrow.
You can use our personal loan calculator below to estimate your monthly payments. Simply enter the loan amount, interest rate, and loan term to see how much you’ll pay over the life of the loan.
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How to get a loan with low income
If you’re ready to apply for a low-income loan, follow these four steps:
- Shop around and compare lenders. Consider as many lenders as possible to find the right loan for you. Be sure to check not only your interest rates but also repayment terms, any fees charged by the lender, and eligibility requirements.
- Pick the loan option you like most. After comparing lenders, choose the loan that works best for your needs.
- Complete the application. You’ll need to fill out a full application and submit any required documentation, such as bank statements or pay stubs.
- Get your funds. If you’re approved, the lender will have you sign for the loan so the funds can be released to you. The time to fund for a personal loan is usually about one week — though some lenders will fund loans as soon as the same or next business day after approval.
If you’re ready to find your personal loan, remember to shop around and compare as many lenders as you can. Credible makes this easy — you can compare your prequalified rates from multiple lenders in just two minutes. Plus, you only need to fill out a single form instead of multiple applications.
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Alternatives to low-income loans
Low-income personal loans aren’t your only option if you need to borrow cash. Here are several alternatives to consider:
- Payday loans: While a payday loan might seem like a good option because it doesn’t require a credit check, it should be a last resort. Payday loans commonly come with APRs ranging from 300% to 500%, making them a costly choice in comparison to other types of loans. Similarly, pawn shop loans and cash advance loans should also generally be avoided because of high rates and fees.
- Secured personal loans: Most personal loans are unsecured, but you might have an easier time qualifying for a secured personal loan. Because there’s less risk to the lender, you could also get a lower interest rate. Just keep in mind that if you can’t make your payments, your collateral could be at risk.
- Credit cards: A credit card can be a good option if you need repeated access to cash, though it might be hard to qualify if you have little to no income. Keep in mind that credit cards also typically come with higher rates and fees compared to personal loans — but you might not have to pay any interest if you can pay off your balance before the due date. Secured credit cards could also be an option to consider.
- Check with local credit unions: Because credit unions are nonprofit organizations, they sometimes offer lower rates and better repayment terms than banks and online lenders. Some credit unions also have a low-income designation, meaning their requirements to qualify for loans might be more relaxed compared to other lenders. It’s a good idea to check with credit unions in your area to see if any low-income options — such as a small short-term loan or emergency loan — are available to you.
Learn More: 11 Personal Loans for Non-U.S. Citizens
Can I get a loan if I am unemployed or self-employed?
While some lenders might not be willing to work with borrowers who are either unemployed or self-employed, others do. Here’s what you might expect if you fall into either of these categories:
- Self-employed: Lenders often require borrowers to provide W2s or pay stubs as proof of income — but you might have a hard time producing any of these if you’re unemployed. In this case, lenders might be willing to accept tax returns or bank statements instead.
- Unemployed: If you’re unemployed, you’ll need to show some type of regular income, such as a pension, a retirement account, or government benefits. Some lenders are also willing to extend loans if you can show you’ll be starting a job soon. For example, Upstart works with borrowers who have a full-time job offer that they’ll be starting in the next six months.
If you need a personal loan and are unemployed or self-employed, be sure to consider your options from as many lenders as possible. This way, you’ll have an easier time finding lenders that accept non-traditional income as well as getting a loan that suits your needs.
If you’re ready to start loan shopping, Credible can help — you can compare your prequalified rates from multiple lenders in two minutes, including some that work with unemployed and self-employed borrowers.
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What can I do if I don’t qualify for a personal loan?
If you don’t qualify for a low-income personal loan, there are three options that might help you become eligible in the future:
- Improve your credit score: Lenders use your credit history to determine whether to approve you for a loan. If you can wait to borrow money for now, it could be a good idea to spend some time building your credit before you apply again. A few ways to potentially improve your credit include making on-time payments on all your credit and utility bills, keeping credit card balances low, and avoiding new loans for the time being.
- Apply with a cosigner: Having a creditworthy cosigner could help you get approved for a loan. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could help you get a lower interest rate than you’d get on your own.
- Local charities or programs: There are many organizations across the country that might be able to help you if you’re in a financial rough spot. For example, 211 can help you connect to social services available to you.
Keep Reading: 13 Best Debt Consolidation Loans for Fair Credit
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 3.99%-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 8%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.
4The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 21.97% and 36 monthly payments of $35 per $1,000 borrowed. For example, the total cost of a $10,000 loan would be $12,646 including a $626 origination fee. APR is calculated based on 3-year rates offered in the last 1 month. There is no down payment and no prepayment penalty. Your APR will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will be approved.
5This offer is conditioned on final approval based on our consideration and verification of financial and non-financial information. Rate and loan amount are subject to change based upon information received in your full application. This offer may be accepted only by the person identified in this offer, who is old enough to legally enter into contract for the extension of credit, a US citizen or permanent resident, and a current resident of the US. Duplicate offers received are void. Closing your loan is contingent on your meeting our eligibility requirements, our verification of your information, and your agreement to the terms and conditions on the www.upstart.com website.
Your loan amount will be determined based on your credit, income, and certain other information provided in your loan application. Not all applicants will qualify for the full amount. Loans are not available in West Virginia or Iowa. The minimum loan amount in MA is $7,000. The minimum loan amount in Ohio is $6,000. The minimum loan amount in NM is $5100. The minimum loan amount in GA is $3,100.
6If you accept your loan by 5pm EST (not including weekends or holidays), you will receive your funds the next business day. Loans used to fund education related expenses are subject to a 3 business day wait period between loan acceptance and funding in accordance with federal law.
Lindsay VanSomeren specializes in credit and loans. Her work has appeared on Credit Karma, Forbes Advisor, LendingTree, and more.