Getting a personal loan might require jumping through hoops to get approved. Different lenders will have different requirements. However, some common factors that every lender considers are your credit score, credit history, and monthly income. Some lenders will have no minimum income requirement, while others will demand your pay be of a certain amount or more to be eligible for the personal loan. This means people with low income may struggle to get loan approvals quickly.
What is considered a low income for personal loans?
Every lender will have its criteria for personal loans. Some lenders will require the potential borrower to fall under a specific income range, while others will require your income to be above a certain amount. It is often believed that people with high income get better terms & conditions. This is when personal loans for low income come to the rescue.
How to qualify for a personal loan with a low income?
Your monthly income is one of the many factors that a lender will scrutinize if you apply for a personal loan. Your credit history, credit score, debt to income ratio, monthly debts overall, and personal expenses will also play a significant role in whether the lender accepts your loan request. If you have a low income but have a good credit score and a low income to debt ratio, then you may still be able to qualify for a personal loan.
However, if you have an average credit score and need the money urgently, following these steps may help you qualify for a personal loan with a low income and average credit score.
- Include all income sources
If you have any side gigs or contractual work, then ensure you include them in your loan application. Lenders don’t care how many jobs you do as long as your total income from all the sources mounts up to a good number. So be sure to include all income sources while filling out your application.
- Smaller loans
Lenders will analyze your monthly income and debt history to determine whether you can repay the loan. Asking for a small loan can get you approved quicker. Lenders will want high income for people applying for big loans.
- Co-signer loans
If your credit score is terrible and you need the cash urgently, try looking for a cosigner. In a co-signed loan, the loan will be approved or rejected based on your cosigner’s credit score. Hence, choose a person who has a good credit score and history. The loan money will be credited to your account only. The cosigner doesn’t get any money. However, if you fail to repay the debt, the cosigner will be obliged to pay off the debt on your behalf. Hence, be careful whom you choose as your cosigner, as their credit score will also get affected.
A small income can make it difficult for you to get approved for a personal loan, but it’s not impossible. Other factors such as credit score, history, personal expenses, and debt to income ratio also significantly influence whether your loan application gets accepted or rejected. You could get accepted for a personal loan with a small income if your expenses and debt-to-income ratio were low. Lenders want to see someone who will be able to handle the loan along with their costs. We hope this helps you figure out the steps you need to take to get your personal loan application accepted.