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A low income doesn’t have to stand in the way of getting a personal loan. While many lenders have minimum income requirements, others care more that you have a steady monthly cash flow.
Online lenders and credit unions may be good options for low-income borrowers or those with thin or bad credit because they can have softer borrowing requirements or weigh factors in addition to income and credit on a loan application.
If you qualify for a personal loan, carefully consider whether the monthly payments will strain your budget. You may also have cheaper financing options.
» MORE: Best personal loans
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What is a low-income loan?
A low-income loan is a personal loan offered to consumers whose annual income falls at or below a specific amount. The U.S. Department of Health and Human Services sets $15,060 as the poverty threshold for an individual and $31,200 as the poverty threshold for a family of four in the contiguous 48 states and Washington, D.C.
The threshold for lower income can vary based on location, cost of living and household size.
» MORE: What is considered low income?
For personal loans, a low-income loan can refer to a lender’s income requirement for borrowers.
Some lenders require a minimum annual or monthly income amount, while others require only proof of regular income — regardless of the amount. For example, online lender Upstart requires a minimum annual income of $12,000, while Upgrade doesn’t have an income requirement.
» MORE: Requirements for a personal loan
Lenders with no or low income requirements
Some lenders don’t have a minimum income requirement, but they still require borrowers to show proof of income on the loan application. Including income from other sources like child support, alimony and social security payments can help you qualify for a loan.
Lender | APR | Loan amount | Minimum income requirement |
|---|---|---|---|
Universal Credit 4.0 NerdWallet rating | 11.69% - 35.99% | $1,000 - $50,000. | None. |
Upgrade 5.0 NerdWallet rating | 8.49% - 35.99% | $1,000 - $50,000. | None. |
Upstart 4.5 NerdWallet rating | 7.80% - 35.99% | $1,000 - $50,000. | $12,000 annually. |
Discover 5.0 NerdWallet rating | 7.99% - 24.99% | $2,500 - $40,000. | $25,000 annually. |
Navy Federal 5.0 NerdWallet rating | 7.49% - 18.00%. | $250 - $50,000. | None. |
Avant 4.0 NerdWallet rating | 9.95% - 35.99%. | $2,000 - $35,000. | $1,200 monthly. |
Capital Good Fund Product not yet rated. | 12.00% - 15.99%. | $300 - $25,000. | None. |
» MORE: Best personal loans for fair-credit borrowers
How to qualify for a personal loan with low income
Lenders consider multiple factors, including income, when evaluating borrowers. Here are some strategies that may help increase your chances of getting approved for a personal loan if you have a lower income.
Check your credit report for errors. Many lenders consider your credit history during the loan approval process. Make sure your credit report is free of mistakes, such as a misspelled name or falsely reported delinquency that could hurt your credit score and your chances of being approved.
List all income sources. Borrowers with low incomes can often list earnings outside of traditional employment, such as freelancing, alimony, child support or Social Security benefits.
Consider a co-signed or joint loan. Adding a co-signer or co-borrower to your application — particularly someone with a higher income and credit score than yours — may improve your chances of qualifying.
» MORE: Personal loans with a co-signer
Consider a secured loan. Some lenders allow borrowers to use a personal asset, such as a vehicle or savings account, as collateral to secure a personal loan. Lenders view secured loans as less risky because they can take possession of the collateral if the borrower doesn’t pay the loan back on time.
» MORE: Best secured personal loans
Ask for less money. The smaller the loan, the less risk for the lender, so requesting a smaller loan amount may help you get approved. A smaller loan can also mean lower monthly payments and interest costs.
Lower your debt-to-income ratio. Pay off any debts that you can in order to lower your DTI. Some lenders will accept a debt-to-income ratio as high as 50%, though lower is better.
Things to consider beyond income requirements
While shopping for personal loans, look not only at income requirements but also at costs and terms.
Loan costs. A personal loan’s annual percentage rate includes interest and any origination fee the lender may charge. The higher your APR, the more expensive the loan. Many financial experts recommend steering clear of loans with an APR above 36% because such loans are unaffordable for many borrowers.
Repayment terms. Typically, personal loans have repayment terms of two to seven years. A longer repayment term means smaller monthly payments, while a shorter term means lower interest costs. If your monthly budget is smaller, a loan with a long repayment term and low monthly payments could be easier to repay than a shorter-term loan.
Use a personal loan calculator to see how different repayment terms and interest rates affect monthly payments.
The option to pre-qualify. Pre-qualifying shows your estimated rate, term and monthly payment before committing to a loan. It involves a soft credit pull, which means you can pre-qualify with multiple lenders to compare offers without impacting your credit score.
How to apply for a loan
Here are five steps to apply for a personal loan at any income level.
Check your credit: Review your credit score and lenders’ borrowing requirements to get an idea of which lenders you may qualify with. You can check your credit score for free with NerdWallet or request a credit report from AnnualCreditReport.com.
Pre-qualify and choose a lender: Compare offers from different lenders to find the loan that fits your monthly budget and needs.
Gather your documents: Lenders will ask for documents to verify your identity, address and income. This can include copies of a driver’s license, utility bill, tax return and a W2.
Apply for a loan: You can apply for a loan online or in person, depending on the lender. A formal application requires a hard credit check, so your score can temporarily decrease a few points at this time.
Get funded: Some lenders offer same-day approval, but others can take a few days. If you are approved, expect to get your funds in less than a week. Your first payment will typically be due after 30 days.
Personal loan alternatives for low-income borrowers
Government assistance. The Temporary Assistance for Needy Families program offers monthly cash payments to individuals with minor children. Those who meet its eligibility requirements, including employment status and income thresholds, can apply in their state.
» MORE: How to get free money from the government
Assistance from local non-profits. Various nonprofit organizations, charities and community groups operate financial assistance programs to help low-income individuals meet their basic needs.
Extra money. Consider a side hustle, like tutoring or walking dogs, to boost your income. Even a temporary gig may give you the extra cash you need.
Family and friends. A friend or family member may offer a loan with better terms and rates — and no strict income requirement, but be mindful of the potential impact on your relationship.
Cash advance apps. Cash advance apps let you borrow from your next paycheck and are repaid on payday. They can be helpful for emergencies, but they may come with fast-funding fees and request an optional tip.
Pawnshop loans. Pawnshop loans let you use an item as collateral to secure a loan. You and the pawnshop lender agree on the loan, terms and interest. Once you pay it off, you get the item back.
