Based on our analysis of over 30 different lenders, we have determined that Upgrade offers the best low-income personal loans, followed by LendingClub, LendingPoint and Ally.
If youre struggling to secure a personal loan on a low income, youre not alone — many grapple with the constraints of limited earnings. The lending scene can often seem stacked against those with smaller budgets, with lenders questioning their ability to manage monthly payments and settle debts.
However, the lending world is vast, and its not just about the size of your paycheck. Some lenders have crafted their offers precisely for those navigating these challenges. With a blend of good credit and informed choices, doors can open even in the tightest financial spots.
Having a low income and bad credit can make getting approved for a personal loan more challenging. However, it is still possible to get personal loans if you do your research and find lenders willing to work with your situation. In this article, I’ll explain what personal loans are, give tips for getting approved when you have low income and bad credit, review the best lenders, and suggest alternatives if you can’t get approved for a loan.
What Are Personal Loans?
A personal loan is an unsecured loan that you can use for almost any purpose. Unlike auto loans or mortgages, personal loans typically don’t require collateral. This makes them easier to qualify for, but it also means the lender is taking on more risk.
Personal loans allow you to borrow a lump sum of money upfront and repay it over time with fixed monthly payments. Loan amounts usually range from $1000 to $100000 and terms are from 1 to 7 years.
Common uses for personal loans include
- Debt consolidation
- Major purchases
- Home renovations
- Medical expenses
- Car repairs
- Vacations
- Weddings and other events
Personal loans have interest rates ranging from around 6% to 36%. The higher your credit score and income, the lower your interest rate will typically be.
Tips for Getting Approved With Low Income and Bad Credit
When you have a low income and bad credit score below 640, it can seem impossible to get approved for a personal loan from a traditional lender. Here are some tips that can improve your chances:
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Apply with a cosigner: Adding a cosigner with good credit and income can make up for your shortcomings as an applicant. Just make sure the cosigner understands they’ll be equally responsible for repaying the loan.
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Use collateral: Some lenders may approve you if you put up an asset like your car as collateral. This gives them something to take if you default. Just be aware it puts your asset at risk.
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Improve your credit score: Pay down balances, dispute errors on your credit reports, and make on-time payments to bring up your score before applying. Even small improvements can help.
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Apply with online lenders: Online lenders like Avant and Upstart are more likely to approve applicants with bad credit than banks and credit unions.
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Consider a secured loan: Secured loans require an upfront deposit that acts as collateral. This deposit is usually around $200 to $1,500.
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Only borrow what you can afford: Don’t take on more debt than your budget allows. Make sure your income is enough to comfortably handle the monthly payments.
Best Lenders for Low Income and Bad Credit
Based on factors like minimum credit scores, loan amounts, and funding speed, here are some of the best personal loan lenders for low income borrowers with bad credit:
Avant (Minimum Score: 580)
- Loans from $2,000 to $35,000
- Terms from 2 to 5 years
- Able to fund loans by the next business day
- Charges admin fee of up to 4.75%
Upstart (Minimum Score: 300)
- Loans from $1,000 to $50,000
- Terms of 3 or 5 years
- AI model approves more applicants
- Fast funding in as soon as 1 day
OneMain Financial (Minimum Score: None)
- Minimum loan amount just $1,500
- Terms from 2 to 5 years
- 1,600+ branches nationwide
- Flexible credit requirements
LendingPoint (Minimum Score: 585)
- Loans up to $36,500
- Offers secured loan option
- Terms up to 48 months
- Often approves applicants others reject
LendingClub (Minimum Score: 600)
- Loans up to $40,000
- Terms from 3 to 5 years
- Often lower rates than payday loans
- Fast approval and funding
I recommend prequalifying with a few lenders to compare loan offers. This lets you check potential loan amounts, rates, fees and terms with no impact to your credit score.
Alternatives if You Can’t Get Approved
If you have a low income and very bad credit, you may not be approved for a personal loan from any lender right now. Here are some options to explore in that case:
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Secured credit cards – These require a refundable deposit and help build your credit.
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Credit-builder loans – Make monthly payments into a savings account to build payment history.
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Payday alternative loans – Offered by some credit unions at lower rates than payday loans.
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401(k) or pension loans – Borrow against your own retirement savings account.
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Hard money loans – Loans from private investors that are more readily available but very expensive.
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Borrow from friends/family – An interest-free loan could help get you back on track.
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Debt management plan – Work with a credit counseling agency to pay off debt and improve your credit.
The most important thing is to avoid predatory lenders like payday lenders and auto title lenders at all costs. Their triple-digit interest rates will just sink you deeper into debt.
Final Thoughts
Having low income and bad credit can feel like an endless cycle when you need cash but can’t qualify for affordable loan options. However, taking the time to build your credit, search for the right lender, and possibly use a cosigner or collateral can make getting approved possible. Or, if loans aren’t an option right now, explore credit-building products and services to improve your financial profile for the future.
Best for Debt Consolidation: Upgrade
Navigating the financial world with a limited income can be challenging. However, low-income personal loans are a beacon for those who might feel cornered by traditional lending criteria. These loans specifically cater to individuals who may not be earning top-tier salaries but still need financial assistance for a myriad of reasons. But why should you consider such a loan? Here are some of the advantages and the specific situations where these loans shine.
- Accessibility: Low-income personal loans are specifically designed for those who might be ineligible for standard loans due to their income, providing a borrowing avenue that might otherwise be closed.
- Flexible Criteria: These loans often consider other factors beyond just income, such as employment stability, creditworthiness or even personal references. This broader criteria set can benefit those with strong financial behaviors but lower earnings.
- Short-Term Relief: Low-income personal loans can offer temporary financial relief for urgent needs, helping bridge the gap until the next paycheck or financial influx.
- Potential for Improved Credit: If managed responsibly, these loans can also serve as a means to build or improve one’s credit score, opening doors to better financial products in the future.
- Emergency Expenses: Whether its an unexpected medical bill, car repair or home emergency, these loans can provide the funds needed when savings fall short.
- Educational Pursuits: A low-income loan can be the stepping stone to a brighter future for individuals looking to further their education but lacking the upfront funds.
- Consolidating High-Interest Debt: If youve accrued high-interest debts from multiple sources, a low-income personal loan can help consolidate these into a single, more manageable payment, potentially at a lower interest rate.
- Major Life Events: Events like weddings, relocations or the birth of a child can come with hefty price tags. A low-income personal loan can provide the financial support to make these events smoother.
What Is a Low-Income Personal Loan?
A low-income personal loan is a financial solution designed for individuals who might not be in a high earning bracket but require financial assistance. These loans recognize that not everyone has a sizable paycheck, yet they might still be financially responsible and capable of repaying borrowed amounts.
Typically, traditional lenders consider income as a major factor in determining an applicants loan eligibility. However, lenders offering low-income personal loans are more accommodating, sometimes emphasizing on other factors like credit history, financial behavior or employment stability. The aim is to assist those who might be underserved by conventional loan offerings, ensuring they, too, have access to needed funds.
PERSONAL LOAN In 5 Minutes BAD CREDIT LOANS as low as 5.99%
FAQ
Can you get approved for a personal loan with low income?
Can I get a $5000 personal loan with bad credit?
Who will give me a loan if no one else will?
Can I get a personal loan with low income and bad credit?
Another option for getting a personal loan with low income and bad credit—sometimes depending on what you plan to use the loan for —is a secured loan rather than an unsecured one. A secured loan requires collateral, such as a car or your home. If you default on the loan, the lender can seize the collateral to cover your debts.
What is considered low income for a personal loan?
A one-person household earning under $22,000 is considered low income by the U.S. Department of Education. An eight-person household can earn over $75,000 and fall into the same category. When applying for a personal loan, lenders consider your income compared to monthly payments for the new loan and other debt.
What are the best low-interest personal loans?
There are no origination fees and you can apply with a joint applicant. Plus, if you have the credit to qualify, the starting interest rate is among the lowest out of our best low-interest personal loans. Happy Money offers one loan — the Payoff loan. It’s designed for consolidating high-interest credit card debt.
What is a low-income personal loan?
Low-income personal loans are personal loans with low monthly or annual income requirements. Depending on the lender, you may still need to meet requirements for credit, income and other financial criteria, but having a low income won’t disqualify you from the loan.