What is a low-income personal loan?
A low-income personal loan is a loan that has no minimum income requirement or is available to individuals with low incomes. There’s no standard low-income dollar amount. Rather, what’s considered a low income varies based on factors including the cost of living in your area and your family size.
Not all lenders require you to meet a minimum income threshold. Instead, most lenders consider your credit score and ability to repay the loan. It’s important for you to consider each lender’s criteria before applying.
Types of low-income personal loans
Even if you have a low income level, financing options are available. Low-income borrowers can access loans from banks, credit unions and online lenders. To minimize the costs associated with taking out a loan, it pays to consider different loan products from a variety of providers.
To ensure you can afford to repay your loan, take some time to compare rates, fees and loan terms before accepting any offer. At many lenders, you can prequalify for a loan with only a soft credit check that does not affect your credit score. This allows you to preview potential rates and get a better sense of what you’ll end up paying in the long run.
Kate Hao, the founder of Happy Mango Credit, a fintech company that helps community banks and credit unions service low- and moderate-income borrowers, had this advice for low-income borrowers: “Take the time to understand the loan offering before signing up. Make sure to always ask for the APR. Many credit unions and community banks offer affordable loans and will even work with you to create flexible payment plans.”
Some common types of low-income personal loans include the following.
Secured personal loans
These are personal loans secured by collateral. It may be easier to get approved for these, even if you have a low income or poor credit score. Remember, your lender will use your collateral to repay the loan if you don’t pay as agreed.
Unsecured personal loans
Since there’s no collateral backing this type of personal loan, qualifying is more difficult than with a secured loan. Minimum credit scores vary by lender, but in general, a credit score of at least 600 is required. While some lenders may have a minimum income threshold, most will simply want to confirm you earn enough income to make all your monthly payments.
Small unsecured personal loans
This type of loan is like a standard unsecured personal loan but offers a lower minimum amount. For example, you may be able to borrow as little as $500 to $1,000 with this type of loan. A smaller loan amount may be easier to qualify for if your income is limited, and if you’re on a tight budget, opting to borrow only the minimum amount you need can keep your monthly payments low and help you maintain more budget flexibility if any unexpected expenses arise.
Payday alternative loans
If you’re a member of a federal credit union, you may be able to qualify for a payday alternative loan. Interest rates for this type of loan are capped at 28%, allowing you to borrow a small amount with a longer repayment period and a lower cost than a traditional payday loan. You can borrow any amount up to $2,000, which must be fully repaid in one to 12 months.
» MORE: How do personal loans work?
Can I qualify for a low-income personal loan?
Although it may be more difficult to qualify for a personal loan if you have a low income, it’s possible. In addition to employment income, you can also include other sources of income, such as alimony, child support and government benefits.
Lenders also look at factors such as your credit score and debt-to-income (DTI) ratio. “Banks and credit unions determine personal loan interest rates based on credit score,” said Hao, of Happy Mango Credit. “Regardless of your income level, if you have a credit score above 680, you will likely find a personal loan with a much lower interest rate than your credit card.”
You should check your credit score and history before applying. This way, you can work on correcting any mistakes in your report and improving your score if needed before you apply.
Alternatives to low-income personal loans
If you need a personal loan but aren’t sure you’ll qualify, consider some alternatives, such as:
- Friends or family: You might ask a friend or family member to lend you the money or serve as a co-signer on a loan. Involving friends or relatives in your financial situations can be tricky though; you don’t want to damage a relationship because you’re unable to pay them back or you leave them stuck making your loan payments as the co-signer.
- Your employer: Some employers may offer short-term loans or cash advances, allowing you to pay them back via payroll deductions.
- Nonprofits or community groups: You can also check to see if nonprofits or community groups in your area offer emergency loans, grants or other types of financial support.
You can find alternatives to personal loans if you have a low income, but stay away from predatory loans with extremely high APRs.
As you’re considering whether to get a low-income personal loan or an alternative, Rick Nott, a chartered financial analyst and senior managing director at Angeles Wealth Management, suggests not using loans where payments are deferred and only using 0% credit card balance transfers if you’re disciplined enough to pay the balance back within the allotted time frame.
“Generally speaking, I would recommend borrowers to pay attention to the compounding rate,” he said. “There are some predatory loan types that may show you a rate, but the compounding may be over a period that is monthly (not annually).”
Risks of predatory loans
It may be tempting to get a quick payday or title loan if you have an immediate funding need, but these types of loans come with extremely high APRs. A two-week payday loan can carry an APR of nearly 400%, according to the Consumer Financial Protection Bureau. Many people who rely on payday loans get stuck in a cycle of borrowing because the borrowing costs are so high.
Hao, of Happy Mango Credit, cautions against these types of loans. “Do not be lured by online payday loans that promise fast cash and could drag you into a perpetual debt cycle,” she advised.
FAQ
Do all personal loans verify income?
While you may be able to get a personal loan without income verification, most lenders will verify your income. You may not need to provide proof of income for some secured loans since the lender can use the collateral to repay the loan if you don’t pay it back as agreed.
What income do I need for a personal loan?
The amount of income you need for a personal loan varies based on the lender and the loan size. Some lenders don’t have any minimum income requirements, while others only accept applications from people who meet a certain annual income threshold.
What credit score do I need to get a low-income personal loan?
You’ll often need a credit score of at least 580 to 660 to qualify for a low-income personal loan. The better your credit score, the more likely you are to get approved (and get a better rate).
Is a low-income loan the same as a hardship loan?
Although both are available to those struggling with income, these loans are not the same. A low-income loan is simply a personal loan offered to people who have lower income levels. In contrast, a hardship loan is designed to provide money to people with insufficient funds to manage a financial crisis, such as paying for medical expenses, a funeral or other emergency expenses.
Bottom line
Even if you have a lower income, you may be able to find a personal loan. Many lenders don’t have a minimum income threshold and consider your credit score and DTI ratio instead. As long as your credit score and DTI ratio meet the lender’s criteria, you’ll likely qualify for an unsecured personal loan. A strong credit score can also help you qualify for lower interest rates.
Alternatively, if you have poor credit or your budget is tight, you might be better off applying for a secured personal loan. Low-income loan alternatives such as a payday advance from your employer or a payday alternative loan from a federal credit union can also help, but avoid fast funding from payday or title lenders that may trap you in a cycle of borrowing that’s difficult to escape.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- U.S. Department of Health and Human Services, “2026 Poverty Guidelines.” Accessed May 26, 2026.
- National Credit Union Administration, “Permissible Loan Interest Rate Ceiling Extended.” Accessed May 26, 2026.
- Consumer Financial Protection Bureau, “What is a payday loan?” Accessed May 26, 2026.
- National Credit Union Administration, “ACCESS Initiative.” Accessed May 26, 2026.
