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Getting a Loan with Low Income

Written by
Sara Coleman
Sara Coleman has worked as a writer and editor in the personal finance space for several years. She is a full-time freelancer covering a variety of financial topics including loans, insurance and credit cards. Her work has been featured in Bankrate, Joy Wallet, Wayfair, Policygenius and numerous other online publications.
Read time: 5 min
Updated on July 27, 2023
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Can you still get a personal loan with low income? Yes, you can, but you might have a higher interest rate or a smaller borrowing range.

A personal loan can be used for a variety of purposes, from paying off costly medical debt to covering an unexpected emergency. Qualifying for a personal loan when you have a low income can be more challenging—but it's not impossible. Having low income or bad credit may mean you pay a higher interest rate or have a limited borrowing range, but it may still be an option. It's vital to understand the requirements for a low-income loan so you are sure you're making the best borrowing decision.

What is the Minimum Income Needed for a Personal Loan?

The requirements for minimum income for a personal loan vary from lender to lender. Each lender sets their own criteria for the minimum income they're willing to accept. You may choose to work with a lender who specializes in a low- or no-income option for personal loans. Some lenders may approve a borrower with a $35,000 yearly income, while others may require a much higher minimum.

Most lenders require proof of income when applying for a loan, such as your W-2, recent pay stubs, or recent tax returns. Keep in mind you should submit all sources of income, which includes alimony, retirement accounts, income from a side hustle, or child support, which factors into your overall income.

Requirements for a Low Income Loan

Income is not the only factor used to determine your approval for a personal loan. While the lender will likely have a minimum income requirement, there are other considerations. Your credit score generally plays a major role in the process, and it's possible to have a good credit score even when you have low income. Your credit history, debt-to-income ratio, and monthly housing or rent payments are all factors in deciding your risk as a borrower.

Checking your credit score before you go through the application process is also helpful. You can do this for free and it will tell you what the lender sees when they pull your credit history. If you have time, you can work on improving your credit score, which can increase your odds of a low income personal loan. You can also work to remove any errors or misinformation on your report, which could also improve your score.

What to do if You Were Denied a Loan Because of Low Income

If you're denied a personal loan because of low income then you may consider a few other options to increase your chances of approval.

  • Add a co-signer: There are some lenders who allow you to add a co-signer or co-borrower to the personal loan. This is someone who has a legal obligation to pay the loan if you fail to make payments. It could be a family member or trusted friend. The co-signer's income, credit score, and credit history are all evaluated just like yours, but it increases the odds of approval if they have a more favorable credit score or income. Keep in mind, your monthly payments not only affect your credit score, but also your co-signer's.
  • Request a smaller borrowing amount: Having a lower income may decrease the amount you're approved to borrow, so applying for a smaller loan amount may be necessary. It's in your financial best interest to apply for the smallest amount possible since you'll be responsible for maintaining monthly payments. The less you borrow, the smaller your monthly payment.
  • Increase your income: If at all possible, you can look for ways to increase your income in order to increase your chances of approval. This may mean negotiating a raise at your current job or getting a new job with higher pay. Some lenders will allow an offer letter as proof of future income. And again, make sure you're providing all possible sources of income, even ones you may not initially consider, like a retirement account.

Low Income Loan Alternatives

There are numerous options when it comes to borrowing money, and a personal loan is only one of them. If you can't qualify for a low income loan at this time then you might consider other borrowing alternatives, such as:

  • Secured loans: A secured loan requires collateral, such as a vehicle you own or real estate, as a condition for borrowing funds. This makes it less risky to the lender because they can secure your personal items if you fail to make payments. This means the requirements are typically less strict and you may have an easier time getting approved. It is important to note that the property securing the loan can be collected to help repay the debt if you cannot make the required loan payments.
  • Credit cards: If you need a smaller amount for a purchase or cash advance, then consider a credit card. If you have a good or excellent credit score then you may qualify for a 0% introductory APR offer for purchases or balance transfers, which could be a less expensive alternative. Keep in mind there are often higher costs, such as balance transfer fees, and higher interest rates associated with credit cards.
  • Borrow from friends and family: It's possible to turn to a family member or friend to borrow money. Whether or not this is an option depends on your personal circumstances. While it could be a convenient solution, it can put a strain on the relationship and should be treated with caution.
  • Payday Alternative Loan: Some credit unions offer a Payday Alternative Loan, which is a short-term loan where you typically don't need a higher income to qualify. These loans let you borrow a smaller amount, but the interest rate is typically higher and you'll have a shorter amount of time for repayment. It's a less expensive alternative to pricey payday loans where you typically have to pay back an amount by your next paycheck. To qualify, you must be a member of a credit union and, depending on the credit union, they may require that you be a member for a certain amount of time.


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