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Low Income Loan

Low Income Loans: Things To Know and How To Get a Loan With Low Income

Updated on February 14, 2023


You will qualify for a personal loan if you have a good credit score and a decent income. However, another concern is getting your loan approved with low or unsteady revenue. Many lenders have a minimum income requirement policy, while others may require you to sign your assets as collateral to guarantee you repay the amount. Though getting a personal loan with a low income might be challenging, it's not impossible. You can still explore options if you're struggling financially and have little revenue.

What Is a Low Income Loan?

Low income loans are personal loans or other financing options for those considered low income, depending on factors beyond your pay. Lenders will determine your monthly income according to the size of your family and your current expenses.
Low income may not always mean your loan application will get rejected. But, if you fall into the lower income category, you may not qualify for the loan amounts you want — or the best terms and interest rates. Remember that you won't be charged a higher interest rate because of your low income; the primary indicator is your credit profile, also known as credit history.

Low Income Loans How It Works

How Do Loans for People With Low Income Work?

Compared to the other kinds of loans available in the market, personal loans are the most common. Unsecured personal loans also have the shortest processing time, which is handy for people who urgently need cash.
One of many critical deciding factors for personal loans is your disposable income, which should be about 30-40% of your total monthly earnings. Different lenders will have other eligibility criteria, so you should check out every lender's requirements to find the most favorable repayment terms.

Learn These Terms When Considering a Low Income Loan

If you are searching for a loan and have a low income, keep in mind that lenders will examine your ability to repay your loan. Your debt-to-income (DTI) ratio is often used to determine this. Here are terms and features to look over when researching getting your loan.

Income Qualification

Some lenders limit their risk by limiting the DTI levels to 25% of your gross income. To accommodate for lower income, lenders may increase that limit to 30% or 40%. Researching each loan to know if you qualify is always a good idea.

Loan Amount

Minimum loan requirements that are too high could prevent you from qualifying. For example, if a lender sets the minimum loan amount to $30,000, your income may only support a $20,000 loan.


Pay close attention to interest rates. By having a lower income, you may be able to take advantage of the better rates typically offered.

Length Of Loan

Negotiating a longer repayment term will reduce your minimum monthly payment.

Direct Assistance

Some federal and state programs provide grants and funds for a down payment. If you qualify, you can reduce the amount you need to borrow and your monthly payments.


You may be required to provide additional guarantees to repay your loan. It could include a co-signer that agrees to pay back your loan if you fall behind on your payments. If you apply for an FHA or VA, or similar government-backed loan, the federal government will provide guarantees to the lender.

Requirements for Low Income Loans

Requirements for Low Income Loans

Low-income loans have the same rules and guidelines as every other loan but with much higher stakes. Here are the basic requirements for a low-income loan:

  • Some lenders will require you to have a certain income. Others may ask you to provide proof of income to accept your loan application. Check the requirements of individual lenders carefully before applying.
  • Credit scores also matter for low-income loans. The minimum credit score requirements and policies differ from lender to lender. You will be eligible only if you fulfill those criteria.
  • Bad credit history can result in your application getting rejected. You must have a decent credit history to apply for any loan, if not a pristine one.
  • If you have multiple side jobs, you can check with the lenders to see if this is eligible to be counted under your monthly income.
  • Lenders generally have a debt-to-income ratio of 36%. For low-income loans, the same restrictions apply. It may vary with some lenders, but having too many debts will jeopardize your loan application.

What Are the Loan Options Available for Low Income Families?

Finding suitable loan options for low-income families can be a daunting task. Lenders may hesitate to accept your loan application if you have a family that financially depends on you. You are more likely to get accepted for a low-income loan if there are multiple breadwinners in a family since you are considered a low-risk applicant.
Other loan options exist for low-income families that don't have high-interest rates. The following are some of the most suitable loan options for low-income families:

Secured Personal Loans

With secured personal loans, lenders require you to sign off your assets as collateral, meaning if you default, they can seize your property as repayment. The collateral could be anything; a car, your house, or even your savings accounts. These loans are easier to be approved by lenders, as they will still be able to collect the repayment from your assets. They don't always require a good credit score, either.

Unsecured Personal Loans

With unsecured loans, you don't have to guarantee any asset as collateral. However, you may be charged a higher interest rate than usual if you have a bad credit score. Some lenders also have minimum income requirements that you'll have to fulfill.

Small, Unsecured Personal Loans

Most small unsecured personal loans have a maximum amount of $3,000. The interest rates, loan terms, and monthly payments will depend entirely on your credit profile and income.

PAL Or Payday Alternative Loans

If you are a federal credit union member, ask them if you can get an alternative payday loan. Payday alternative loans have low application fees, with the repayment period ranging from one to 12 months. The interest rates are capped at 28%, and the maximum loan amount for a PAL is $2,000.

How Can I Qualify for a Personal Loan With Low Income?

The lender considers various factors while they check your loan application form. Your income could be a deal-breaker, but lenders also assess your credit score, credit history, and expenses to decide whether you will be a credit risk. Here are some tips to help you qualify for a personal loan with a low income:

Keep A Low Debt-To-Income Ratio

If you have multiple ongoing debt, completely repaying them is advisable before requesting another loan. The less debt you have, the easier it is for you to get accepted.

Check For Credit Errors

Though rare, mistakes in a credit report could still be an issue. Before applying for a loan, check your credit history to ensure everything is okay. If you notice anything unusual or think the information is incorrect, report it to your lenders immediately. A clean credit history can help you qualify for low-income loans even with bad credit scores.

List All Income Sources

Some lenders count your monthly salary with side gigs, freelancing, and other income. Ask your lender if they will consider doing the same for you. Having more than one income source can help you negotiate better terms.

Consider A Co-Signer

With a co-signed loan, you can ask someone with a better credit score and income to apply for a loan. The co-signer is legally bound to pay off the debt in case you aren't able to make the payments. The loan will also be recorded in their credit history, affecting their credit score.

Get A Smaller Loan Amount

Small loan amounts mean less risk to the lenders. Your loan application is more likely to get accepted if you request a small amount. The less money you borrow could lead to lower monthly repayments.

Are There Any Alternatives for Low Income Loans?

If you aren't able to afford a low-income loan or don't qualify for one, then there are other options available that can get you a loan, even with a low income.

Title Loans

Like a mortgage, a title loan allows you to get a loan against your car title. To get your vehicle's title back, you must repay the debt in full by the deadline, or the lenders will seize your car as collateral. The vehicle doesn't need to be a car. It can be a motorcycle, boat, or even a recreational vehicle. You can apply for a loan if you have a valid license and paperwork for the vehicle.

Credit Cards

You can qualify for a credit card application even with a low income. You will have a low credit limit, but it's still an option. Check with lenders if they have any minimum income requirements.

Family & Friends

This is a no-brainer, and you won't be forced to pay an outrageous processing fee or interest rates. If you have close friends or family that you think will be able to help you out, borrowing from them will probably save you money.

Cash Advance

Credit card issuers also offer a cash advance loan. When you take out a cash advance loan, you borrow the amount against your credit card. You will have to pay a fee for a cash advance loan, and the interest rates might be steep.

Payday Loans

Payday loans charge you a higher interest rate, and you need to repay the loan before your next paycheck, which means you have about 2 to 4 weeks to pay off the loan. Payday loans are difficult to repay, but if you can handle the cost and short deadline, you can consider applying for them.

The Bottom Line

Getting any loan application approved by lenders can be challenging when you are strapped for cash and don't make enough money. However, there are options to get a loan, especially for low-income families and individuals. Sometimes the terms and conditions may not be ideal for such loans, but they are worth considering. We hope this helps you understand your options and prepare yourself accordingly.

Photograph of author Joseph Priebe

Joseph Priebe

Joseph Priebe takes pride in assisting audiences with his articles to help them make sound financial decisions.

With over ten years of experience writing financial content his goal at CASH 1 has always been creating engaging and easy-to-digest information for anyone searching for immediate or long-term monetary solutions.

When Joseph is not writing about personal finance, you can find him photographing the Southwest United States with his 4x5 Graflex Crown Graphic camera. He is based in Phoenix, Arizona.