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You may be able to get a personal loan with a low income from a lender that has a low, or no, minimum income requirement. Having a cosigner, good credit and low monthly bills could help your chances of getting approved or snagging a low interest rate. But if you don't know someone who will cosign and don't have time to improve your credit or pay down debts, you could also look into alternatives to a personal loan.
What Is Considered Low Income for a Personal Loan?
Lenders set their own criteria for whom they'll lend money to and the terms they'll offer applicants. Some companies require you to have an income of some sort but don't have a minimum income requirement. Others, require borrowers to have an annual income of at least $35,000 to qualify for a personal loan.
Even if you meet the requirements, the best rates and terms may only be offered to applicants with a high income. While you may qualify for a loan with a lower income, expect to pay more than the lowest advertised interest rate.
How to Qualify for a Personal Loan With Low Income
Your income is only one of many factors that lenders will consider when reviewing your application. Additionally, your credit history, credit score, history with the lender, monthly debt and housing payments, and debt-to-income ratio (DTI) can all impact your eligibility and loan offers. If you can improve these factors, you may be able to increase your chances of getting approved in spite of having a low income.
Make Sure You Include Every Source of Eligible Income
Lenders will consider income from a variety of sources, including Social Security, retirement accounts, side gigs, public assistance, alimony, child support and long-term disability or workers' compensation payments. Make sure you add them all up when you're filling out an application.
Apply for a Smaller Loan
One reason lenders consider your income is they want to be sure you can afford the new loan payments. Applying for a smaller loan, which will have lower monthly payments, could make getting approved easier.
Add a Cosigner or Co-Borrower
Some personal loan lenders and lending services let you add a cosigner or co-borrower to your application. The lending service will then consider both your incomes, debts and credit when evaluating your application, which could help you qualify for a loan or more favorable terms. Both people also have a legal obligation to repay the loan, and missing payments could hurt both your credit scores.
Negotiate a Raise or Look for a New Job
If you can get a raise or a new job offer, the increasing income could help you qualify for a loan. And while you generally verify your income using a pay stub, tax return or bank statement, lenders might consider an offer letter as proof of your increasing future income before your first paycheck arrives.
Alternatives to Personal Loans
If you can't qualify for an affordable personal loan right now, you could try looking into other types of loans that may be easier to get:
- Secured loans: Secured loans tend to have less stringent qualification requirements than unsecured personal loans, and a secured personal loan, auto title loan, pawnshop loan or second mortgage might be an option. However, you risk losing the collateral if you can't repay the loan.
- Credit cards: You could also consider using your credit card for a purchase or cash advance, although the fees and high interest can make this an expensive option. If you have good credit, also look into a new credit card with an intro 0% annual percentage rate (APR) offer, which you can use to make purchases without paying interest during the promotional period. Just keep in mind that the card might not have a high credit limit if you have low income.
- Friends or family members: People you know personally might not check your credit or ask about your income when lending you money. However, consider the potential strain on the relationship and what could happen if you're unable to repay the loan.
- Payday alternative loans: Some credit unions offer payday alternative loans (PALs) as a less-expensive option than payday loans. While you may need an income to qualify, you don't necessarily need a high income.
Check Your Credit Before Applying
Even someone with a high income could have trouble getting a personal loan if they have poor credit. You can check your FICO® Score☉ for free from Experian and get insights on which factors in your credit report are most helping and hurting your score. From there, you can take steps to improve your credit, which can help you qualify for better loan and credit card offers.