Everything you need to know about low income personal loans – Forbes Advisor


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Lenders consider many factors when deciding if you qualify for a personal loan, including sufficient income. However, having a low income does not necessarily mean that you will not be able to borrow money. Here’s how you can still qualify for funding.

What is a personal loan for low income people?

A low-income personal loan is a loan that does not have a minimum income requirement or has an income threshold accessible to a low-income person.

For example, BestEgg is a lender that verifies the borrower’s income but does not set a minimum income requirement. LendingPoint is another lender that requires an annual income of $35,000 for personal loans, which might be achievable for a low-income borrower.

How to qualify for a personal loan with low income

Eligibility for a low income personal loan works the same as for any other personal loan. Lenders will review your credit to determine whether or not to approve you and at what interest rate. Having a high credit score can help you qualify for a lower interest rate, which saves you money over the term of the loan.

Besides your credit, lenders consider your debt-to-income ratio (DTI) – your chances of approval might be lower if your DTI is high. Your DTI ratio is the percentage of your monthly income that goes to paying off debt. Lenders generally look for borrowers to have a DTI of less than 40%. You can calculate your DTI by adding up your monthly debt payments, dividing that number by your gross monthly income, and multiplying by 100 to get a percentage.

If you already have a lot of debt to pay each month, you may not qualify for a loan or you may be approved for a lower loan amount. Although the DTI requirements can be frustrating, they are in place to ensure you don’t take on more debt than you can handle.

How to get a personal loan on a low income

Follow these general steps to get a low income personal loan:

  1. Add up how much you earn. Count income from your full-time job and side hustle to get a full picture of how much income you generate each month.
  2. Calculate your DTI. If you have a DTI above 40%, you may need to pay off some of your debt before you qualify for a personal loan.
  3. Prequalify with lenders. Many lenders allow you to prequalify for loans with a simple inquiry that does not affect your score. Prequalification forms usually ask basic questions such as how much you earn and what your credit rating is.
  4. Compare offers. With a few preliminary offers in hand, you can compare rates, terms, and fees before deciding on the loan that best suits your needs.
  5. Complete the formal application. Preliminary offers are usually conditional pending a full review of your application which includes document checks. At this stage, you may need to provide pay stubs and other documents before signing the contract.
  6. Obtain financing. Loans are often deposited directly into your bank account. Depending on the lender, financing may take place just days after loan verification.

Can you get personal loans with bad credit and low income?

While you may qualify for personal loans and even some small business loans with bad credit and low income, the terms may be undesirable. Personal loans for bad credit and low income tend to have high rates and fees, making borrowing more expensive.

Payday loans, title loans, and cash advances are particularly notorious for being expensive and time-consuming. This is because payday loans and title loans can have fees equivalent to 300% APR, and if title loans are not repaid, you could end up losing your car.

In an emergency, exploring options like borrowing from friends or using a credit card might be a more affordable way to fill a gap.

How to qualify for affordable loans

Taking steps to improve your financial situation before you borrow can help you qualify for better loans so you don’t end up with a loan that becomes a debt trap. Here are four tips:

1. Clean up your credit

If there are any inaccuracies in your credit report, disputing and removing any errors could improve your credit history. Reducing your credit usage on revolving accounts (i.e. credit cards) can also help boost your score.

Credit history is the most important credit score factor of all, so making timely payments on accounts over time can help improve your credit. If you have a limited credit history because you’re new to credit, a tool like Experian Boost can add utility and subscription payments to your credit report so that on-time payment history can be taken into account in your score.

2. Get a co-signer

A co-signer is someone who is applying with you and their credit and income are considered in your application. Adding a co-signer with a higher credit score and income than yours could help you qualify for a larger loan with better loan terms.

3. Increase your income

If you don’t have access to a co-signer, look for ways to increase your income, either by asking for a raise at your full-time job or by exploring roles in new companies. Starting a side hustle or freelancing could be other ways to increase your income. These additional income streams could potentially cover a financial shortfall so you can avoid having to borrow completely.

4. Pay off or restructure your debt

If you have a high DTI, you may need to pay off debt before you can qualify for more debt products. For student loans, signing up for an income-contingent repayment (IDR) plan could be a way to lower your monthly debt payments to improve your DTI.

Alternatives to Personal Loans

Personal loans aren’t the only option if you need to borrow money. If you can’t get a personal loan, here are some other options to consider:

  • Credit card. Credit cards can provide a line of credit that you can draw on and repay as needed. But consider that your income and DTI will also affect the amount of credit a creditor might be willing to extend to you.
  • Bill payment plans. If you need a personal loan to cover a big expense, like medical bills or taxes, you can try negotiating a payment plan rather than borrowing money to cover the bill.
  • Offers Buy now, pay later (BNPL). BNPL offers allow you to make a purchase today that you can pay later in installments, sometimes without interest. If you want to make small payments for an item, a BNPL like Affirm, Klarna or PayPal Pay in 4 might be options to consider.
  • Alternative Payday Loans (PAL). PALs are small loans offered by credit unions with flexible eligibility requirements. Using a PAL could help you bridge a small financial gap without having to rely on high-interest short-term loans.


Lenders may not have set minimum income requirements, but they will look at your income to determine if you have enough money to meet the payments. Shopping around can help you find lenders willing to work with your unique financial situation.

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