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Low-Income Loans: What They Are and How to Access One

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Low-Income loans: What they Are and Where to Get One
A borrower with a low income might qualify with a personal loan However, there could be cheaper alternatives to financing.


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Last updated on Jan 25, 2023

The majority or all of the items featured on this page are provided by our partners who compensate us. This influences which products we write about and the location and manner in which the product is featured on the page. But, it doesn't affect our assessments. Our opinions are entirely our own. Here's a list and .



A lower income shouldn't need to hinder your chances of obtaining a personal loan. While many lenders have the minimum income requirement, others prefer to see an ongoing cash flow.
Credit unions and online lenders are a viable option for those with low incomes or with thin or bad credit, as they may offer lower borrowing requirements, or consider factors beyond your credit and income when submitting a loan application.
If you are eligible for a loan, you should carefully consider whether the monthly installments will strain your budget. You might also have lower-cost loans than borrowing a personal loan.
How do I get a lower-income loan?
An income-based loan is a type of personal loan offered to consumers with income that falls at or is below a certain income level. It is a term used by the Pew Research Center, which examines trends in economics and demographics and trends, defines low income as three-person households with annual income of less than $52,000 (using information from 2020). The minimum income for a lower-income household can vary based on location and the cost of living.
For personal loans the term "low-income" loan could mean the income requirements of a lender for the borrowers.
Certain lenders require an annual or monthly income and some require evidence of regular income whatever the sum. For instance, an online lender has a minimum requirement of $24,000, but does not have a minimum income requirement.
How do you qualify for a personal loan for those with low income
Lenders consider multiple factors such as income when evaluating potential borrowers. Here are some strategies that may help for an individual loan if you have less money.
Check your credit report for errors. Many lenders look at your credit score during your loan approval process. So, ensure that you have a credit history clean of errors, like an incorrect spelling of your name or a incorrectly reported delinquencies that could harm your credit score and reduce your chances of being approved.
List all income sources. People with low incomes can list earnings from traditional employment as well as freelance work, or even a pension, dependent on the lender.
Think about a joint or co-signed loan. The addition of a co-signer on your application (especially those with higher incomes and credit score -- could make it easier to secure a loan with a lower income.
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Ask for less amount of money. A smaller loan is, the lower risk the lender is taking So requesting a lower loan amount could help you get approved. A smaller loan could also result in lower monthly installments and lower interest costs.
Lower your debt-to-income ratio. Make sure to pay off all debts you can to lower your DTI. Most lenders will allow the maximum debt-to-income ratio of 50%, but lower is better.
Lenders with no or low income requirements
Certain lenders don't require a minimum income, but they still require applicants to prove an income when filling out their loan application. In addition, other income sources such as child supportor alimony or social security contributions can help you qualify for a loan.
Lender



APR



Loan amount



Minimum income requirement



4.5 NerdWallet's ratings were determined by our editorial team. The scoring formula considers the factors we believe to be consumer-friendly, including impact to credit score fees and rates, customer experience and responsible lending practices.




11.69% - 35.93%


$1,000 - $50,000.


None.


5.0 NerdWallet's ratings are compiled by our editorial team. The scoring formula is based on factors we consider to be a good choice for consumers, such as impact to credit score, fees and rates as well as the customer's experience and responsible lending practices.




8.49% - 35.97%


$1,000 - $50,000.


None.


4.5 NerdWallet's ratings are determined by our editorial staff. The scoring formula takes into account the factors we believe to be beneficial to consumers, including the impact on credit score, fees and rates as well as the customer's experience and responsible lending practices.




6.50% - 35.99%


$1,000 - $50,000.


$12,000.


4.5 NerdWallet's ratings were determined by our editorial team. The scoring formula takes into account aspects we believe are beneficial to the consumer, such as impact on credit score, fees and rates, customer experience and ethical lending practices.




7.73% - 29.99%


$2,000 - $45,000.


$24,000.


5.0 NerdWallet's ratings are determined by our editorial staff. The scoring formula takes into account aspects we consider to be consumer-friendly, including the impact on credit score, rates and fees as well as the customer's experience and ethical lending practices.




7.49% - 18.00% .


$250 - $50,000.


None.


4.0 NerdWallet's rating is determined by the editorial staff. The scoring algorithm takes into consideration factors we consider to be a good choice for consumers, such as the impact on credit score rate and fees, the customer experience and responsible lending practices.




9.95% - 35.95% .


$2,000 - $35,000.


$1,200 monthly.


The product isn't yet rated.


5.00% - 15.99% .


$300 - $50,000.


None.








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Things to take into consideration beyond the income requirements
While looking for personal loans do not only look at income requirements but also costs and terms.
The cost of a loan. Personal loans include the cost of interest and also any . The greater your APR, the more you'll have to pay in monthly and in total interest. Many financial experts recommend only looking at loans that have an APR lower than 36%, which is the limit at which an loan can still be considered to be affordable.
Terms of repayment. Most personal loans have repayment terms of two to seven years. A longer repayment term implies lower monthly payments while a shorter term means lower interest costs. If your budget for the month is smaller due to having a lower income, a longer term may be more beneficial financially.
The pre-qualification option. The application displays the estimated rate and term before making a commitment to a loan. This is a soft credit pull, that means you are able to pre-qualify for multiple lenders and assess offers without impacting your credit score.
How do I request a loan
Below are the five actions you can do you earn any amount.
Examine your credit report: Check your credit score as well as the requirements for borrowing from lenders to get an idea of what lenders you could be eligible for. You can for free with NerdWallet and request your credit score from .
Pre-qualify and choose a lender Check out offers from various lenders to choose the loan that fits your budget for the month and your needs.
Take your documents with you: Lenders will ask for documents to confirm the identity of you, your address and your income. This could be as simple as copies of your driver's license and utility bill, a tax return, and W2.
Apply for a loan Apply for an loan either online or in person with certain lenders. An official application requires a , so your score can decrease a few points at this time.
Receive funds: Some lenders offer immediate approval, while others require a few days. If you are approved, you can expect to receive your money in less than a week. The first installment will usually be due after 30 days.

Check if you are pre-qualified for a personal loan - without affecting your credit score
Simply answer a few questions to get your own rates estimates from several lenders.



Personal loan alternatives for low-income borrowers
Government assistance. program offers monthly cash payments for children who are minors. Those who meet its eligibility requirements, which include income and employment status, can apply for the program in their state.
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Extra money. Consider a , like dog walking or tutoring to boost your income. Even a part-time job can provide you with an extra income you're looking for.
Family and friends. A friend or family member with more favorable terms and rates, but be mindful of the possible impact of your friendship.
Cash advance applications. You can borrow funds from your next pay check and will be repaid at the time of payday. They are a great option for emergency situations, but they could have fees for quick funding and ask for an optional tip.
Pawnshop loans. let you use an item as collateral to secure the loan. You and the pawnshop lending institution can agree on the loan conditions, terms and the interest. After you have paid it off you will get the item returned.


About the authors: Chanell Alexander is a former personal loans writer for NerdWallet.


Ronita Choudhuri-Wade is the personal loans to NerdWallet.







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