Loans for Low Income Families With Bad Credit: Your Complete Guide

Finding loans when you have a low income and poor credit can feel impossible. Traditional lenders like banks typically require good credit scores and stable incomes to qualify for their loans. Fortunately, there are specialized lenders that offer bad credit loans tailored specifically for low income borrowers.

In this complete guide, we’ll cover everything you need to know about getting loans for low income families with bad credit, including:

What Are Bad Credit Loans for Low Income Borrowers?

Bad credit loans are loans designed for people with credit scores below 640. Also called subprime loans, they often have higher interest rates and fees to compensate for the increased risk.

Lenders that offer bad credit loans look at other factors beyond your credit score and income when deciding whether to approve you. These include your debt-to-income ratio, employment history, and borrowing history.

Bad credit loans for low income families are a type of subprime loan created specifically for borrowers with low credit scores and incomes. Amounts range from $500-$5,000 with terms from 6-24 months.

Types of Bad Credit Loans for Low Income Borrowers

There are several types of bad credit loans suitable for low income families

• Payday loans – Small, short-term loans of $500 or less. You provide a post-dated check or debit authorization for the amount borrowed plus a fee The lender deposits the check/payment on the loan’s due date, typically your next payday

• Title loans – You use your car as collateral for the loan. The lender places a lien on your car title and can repossess your vehicle if you default.

• Pawn loans – Also secured by collateral, usually jewelry, electronics, or other valuables. The items are held by the lender until you repay the loan.

• Installment loans – You repay the loan amount plus interest in regular installments over several months. Installment loans up to $5,000 are available from online lenders.

• Personal loans – Unsecured installment loans up to $35,000 from online lending platforms like Avant and Upstart. They offer longer repayment terms than other types of bad credit loans.

What Do Lenders Look For?

When applying for bad credit loans with low income, lenders want to see:

• Minimum credit score – Each lender sets their own minimum score, but many bad credit lenders accept scores as low as 550. Some online lenders have minimums as low as 300.

• Income – Most lenders require a steady income stream, like from a job or government benefits. Some only require you have regular income deposits into a bank account.

• Proof of identity – Valid government-issued ID.

• Contact information – Reliable phone number and email address.

• Bank account information – An active checking account where loan funds can be deposited electronically.

Meeting these criteria demonstrates you have the ability to repay the loan. Lenders will also check employment history, income, and existing debts.

How to Qualify for a Loan with Low Income and Bad Credit

Here are some tips that can help you get approved for a loan when you have low income and poor credit:

• Apply with a co-signer – Adding a co-signer with better credit helps compensate for your bad credit. Just be sure the co-signer understands they’ll be responsible for repaying the loan if you can’t.

• Use secured loans – Secured loans like auto title loans use collateral and make it easier to get approved with bad credit. Just be cautious borrowing against valuable property.

• Start small – Limit your first loan request to a smaller amount, then build up to larger loans as you establish a history of on-time payments with the lender.

• Check your credit report – Ensure there are no mistakes negatively impacting your score. You can get free reports from AnnualCreditReport.com.

• Avoid new credit applications – Lots of recent requests make you look desperate and less creditworthy. Try spacing out applications by at least six months.

• Make on-time payments – Pay all your bills on time going forward. Consistent timely payments will slowly improve your credit.

Where to Get Loans for Low Income Earners with Bad Credit

Here are some top lenders to check out for bad credit loan options for low income borrowers:

Lenders With Minimum Credit Scores Around 300

• Upstart: Personal loans up to $50,000, minimum score 300
• OppLoans: Installment loans up to $4,000, minimum score 350
• CashUSA: Personal loans up to $10,000, minimum score 500

Lenders With Minimum Credit Scores Around 550

• Avant: Personal loans up to $35,000, minimum score 550
• LendingPoint: Personal loans up to $36,500, minimum score 550
• Upgrade: Personal loans up to $50,000, minimum score 550

Secured Loan Lenders

• TitleMax: Car title loans up to $10,000 in some states
• LoanMart: Auto title loans in 11 states including California
• Speedy Cash: Offers pawn loans at branches nationwide

When comparing lenders, check they operate in your state and compare factors like minimum credit scores, loan amounts, fees, and funding time.

What Are the Requirements to Get Approved?

Here are some typical eligibility requirements low income borrowers with bad credit must meet:

• Minimum credit score of 550-600
• Monthly income of at least $800-1,000
• 18+ years old
• Valid U.S. ID
• Checking account

Income requirements vary across lenders but even a monthly income of $800 can be enough. Having direct deposit set up makes approval more likely.

Meeting just the minimum requirements doesn’t guarantee approval. But the better your credit score and income, the higher your chances even as a low income applicant.

How Much Can You Borrow?

Loan amounts offered to low income borrowers with bad credit are usually quite small. Here are some typical loan amount ranges:

• Payday loans: $100 to $500
• Pawn loans: up to $5,000
• Title loans: 25-50% of your car’s value
• Installment loans: $1,000 to $5,000
• Personal loans: $1,000 to $15,000

With poor credit, you will likely need to start with small loan amounts under $1,000 to prove you can manage the payments. Payday lenders offer amounts as low as $100. As you build your credit, you can qualify for larger personal loans up to $15,000.

What Interest Rates and Fees Should You Expect?

Bad credit loans come with much higher costs than loans from traditional lenders:

• Interest rates – Commonly start at 30% or higher and can exceed 400% with payday loans. The maximum legal rate varies by state.

• Origination fees – 1-10% of the loan amount charged upfront to process the loan.

• Late fees – Around 5% of the monthly payment or $15-30 for each late payment.

• NSF fees – $25-40 if your payment doesn’t go through due to insufficient funds.

Always factor the fees into the overall cost. An interest rate of 30% with low fees can be less expensive overall than a loan with a lower rate but very high origination fee.

How Do You Apply for a Bad Credit Loan?

The loan application process involves these basic steps:

1. Pre-qualify – Many lenders let you check your potential rate and loan amount via soft credit check.

2. Complete application – Fill out the full application with personal details and bank account info for verification.

3. Get matched – Online lenders match you with a loan offer from their lending partners.

4. Accept offer – Review all terms before signing the e-contract.

5. Verify income and identity – Provide pay stubs, bank statements, and photo ID.

6. Get funding – Loan funds deposit directly into your bank account, often as fast as the next business day.

The entire process from pre-qualification to funding can take as little as 24-48 hours with some online lenders. Others may take 7-10 days for traditional underwriting and verification.

Pros and Cons of Bad Credit Loans for Low Income Borrowers

Pros:

• Easy to qualify for with bad credit
• Fast access to cash when you need it
• Can help establish positive payment history
• Opens the door to rebuild credit score

Cons:

• Very high APRs, sometimes exceeding 400%
• High origination/processing fees
• Small loan amounts may not solve bigger issues
• Very short repayment terms as little as 2 weeks

While bad credit loans offer quick cash access, consider all your options and costs. Avoid payday loans and title loans if