Best low-income loans: 12 lenders to consider

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While having a low income might limit your borrowing options, there are lenders that offer low-income loans. (iStock)

Annual income is one of the many pieces of information lenders ask for when evaluating credit applications. And it’s common for personal loan lenders to have minimum income requirements.

If you need a personal loan for debt consolidation, a home renovation or to cover a major purchase or expense, it can be difficult to get a loan with low income. While there are lenders that offer low-income personal loans, they usually come at a higher price.

But if you tread carefully and comparison shop when looking for a low-income loan, it’s possible to find one that fits your needs and your budget.

You can learn more about personal loans and compare rates from multiple lenders using Credible.

What is a low-income loan?

To understand what a low-income loan is, it helps to first understand what could be considered a low income. While there’s no single definition of what low income means, different federal agencies set some guidelines.

For example, the Department of Health and Human Services (DHHS) defines a low income as less than 200% of the department’s poverty guidelines. For 2021, a family of four with a total household income of $26,500 is considered in poverty, according to the DHHS. That means a family of four with a total income of $53,000 could be considered a low-income family.

Luckily for borrowers whose income is well below that level, lenders who offer low-income loans often set their minimum income requirements at $30,000 or less. Many lenders have no minimum at all.

Lenders request borrowers’ income information specifically so they can determine if the borrower can afford to repay the loan. That means low-income loans may come at a higher price than loans with higher income minimums.

In particular, low-income borrowers will often have less favorable interest rates on their loans. The lender charges a higher interest rate — and often reduces the maximum loan amount and adjusts the repayment term, as well — to ensure that it recoups its money.

How do low-income loans work?

A low-income personal loan is much like any other personal loan. The borrower receives the loan amount as a lump sum and must make monthly payments until the loan is repaid.

The repayment term will generally last between one and seven years, depending on the lender. In addition to paying back the principal — the total amount received as a lump sum — the borrower must also pay interest on the loan, which is expressed as a percentage.

Many lenders also charge fees, such as an application fee, an origination fee ( a one-time cost deducted from your lump sum), a prepayment penalty for paying off the loan early and late payment fees if you don’t pay on time every month.

The eligibility requirements for low-income loans will likely differ from general personal loan requirements.

Most lenders look at your income, repayment history, credit score and debt-to-income ratio (the amount of money you owe to creditors compared to your monthly income) to determine your credit health. A modest income could indicate you’ll struggle to carry a monthly loan payment, and may prompt lenders to take a closer look at your credit scores.

A credit score is a numerical representation of how you’ve managed credit in the past, which lenders look to for an idea of how likely you are to repay a loan. Generally, the higher your credit score, the more favorable rates and terms you can qualify for. While it’s possible to have a good credit score with low income, having a low credit score and low income could make it very difficult to get a low-income personal loan.

9 best lenders to consider for low-income personal loans

The following nine Credible partner lenders offer personal loans to borrowers who make $30,000 or less per year. Keep in mind that some of these lenders don’t have a minimum income requirement at all. Also note that you’ll likely need to meet other lender requirements, such as having good credit.

Avant

Loan amounts: $2,000 to $35,000
Minimum income: $24,000
Minimum credit score: 550

Best Egg

Loan amounts: $2,000 to $50,000
Minimum income: Verifiable income must support ability to repay
Minimum credit score: 600

FreedomPlus

Loan amounts: $10,000 to $35,000
Minimum income: None
Minimum credit score: Does not disclose

LendingClub

Loan amounts: $1,000 to $40,000
Minimum income: Verifiable income must support ability to repay
Minimum credit score: None

LendingPoint

Loan amounts: $2,000 to $36,500
Minimum income: $20,000
Minimum credit score: 580

Marcus by Goldman Sachs

Loan amounts: $3,500 to $40,000
Minimum income: $30,000
Minimum credit score: 660

Payoff

Loan amounts: $5,000 to $40,000
Minimum income: None
Minimum credit score: 600

Prosper

Loan amounts: $2,000 to $40,000
Minimum income: Must have some form of annual income
Minimum credit score: 640

Upstart

Loan amounts: $1,000 to $50,000
Minimum income: $12,000
Minimum credit score: 580

Comparing personal loan rates from these lenders won’t affect your credit when you use Credible.

Other lenders to consider

The following three lenders are not Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a low-income loan.

Laurel Road

Loan amounts: $5,000 to $45,000
Minimum income: None
Minimum credit score: 660

Earnest

Loan amounts: $5,000 to $75,000
Minimum income: Does not disclose
Minimum credit score: 680

PNC Bank

Loan amounts: $1,000 to $35,000
Minimum income: Does not disclose
Minimum credit score: Does not disclose

Methodology

Credible evaluated the best personal loan lenders for low-income loans on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms and fees. Credible’s team of experts gathered information from each lender’s website, customer service department and via email support. Each data point was verified to make sure it was up to date.

How to qualify for a low-income loan

Every lender has its own specific qualification requirements for borrowers. While many lenders have a minimum income requirement, the minimum varies from lender to lender, and several have no specific minimum. Low- and moderate-income borrowers may need to pay close attention to those minimums.

In addition to income, lenders generally also consider the following factors:

Credit history
Credit score
Debt-to-income ratio

If you have a low income, you can increase your eligibility for a low-income personal loan by looking at these three metrics. Request your free credit reports from Annualcreditreport.com to check that all the information on them is correct. If there are any errors on your credit report, repair the mistakes to help improve your loan eligibility.

Additionally, focusing on making on-time payments to all your current creditors can help improve your credit score, as can paying down your outstanding debt. Not only will paying down (or paying off) your debt help increase a bad credit score, but it will also lower your debt-to-income ratio. These aren’t instant fixes, though, so it may take some time for you to see a difference in your credit score.

If you qualify with a lender, make sure your loan payments will fit comfortably in your budget before you accept the loan. Missing payments could damage your credit and affect your ability to access more credit in the future — so be sure to borrow only what you can afford to pay back. You can estimate how much you’ll pay for a loan using Credible’s personal loan calculator.

Steps to qualifying for a low-income loan

Once you’re ready to apply for a loan, follow these steps:

Compare lenders. Shopping around allows you to identify which lender will fit your needs and your budget. While comparing lenders, make sure you look at interest rates, repayment terms, any fees charged by the lender and eligibility requirements (such as income minimums).
Choose your loan option. After comparing lenders, choose the loan that’s the best fit for your needs and circumstances.
Complete the application. Apply online and submit any required documentation, such as pay stubs or tax returns.
Get your funds. Once you’ve been approved, the lender will ask you to sign for the loan and will release the money. Most personal loans are funded within about a week, although some lenders can fund their loans as quickly as the next business day after approval.

Credible is free to use, with no hidden fees. And you can check your prequalified personal loan rates in minutes.

Low-income loan alternatives

If a low-income personal loan isn’t right for you, there are several alternatives for getting the money you need. Each of these options has downsides, so be cautious before committing:

Payday loans — Though payday loans can offer you quick cash advances, they’re rarely a good option because of their fees, which typically equate to an APR of 400%. Payday loans also have low maximum loan amounts, usually no more than $1,000 at a time. And if the lender automatically rolls unpaid balances into a new payday loan, you can find yourself sinking deeper into debt.
Title loans — If you own a car, truck or motorcycle, a title loan allows you to borrow against the vehicle while the lender holds onto the title. Like payday loans, these generally aren’t a good option for most borrowers, since the APR is typically 300% and you run the risk of losing your vehicle if you can’t pay back the loan.
Pawn shop loans — You can use a valuable item as collateral at a pawn shop to take out a loan. If you pay back the loan within the set time frame (generally two weeks to a month), you’ll get the item back. But if you don’t pay off the loan, the pawn shop will keep your item and sell it. Since this kind of loan requires no credit or income check, it could be a good option for a low-income borrower, with the caveat that you may lose your item and the finance fees may be as high as those of payday loans and title loans.