Best Low-Income Loans – Help for All
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In the U.S., inflation hit a 41-year high in 2022, meaning prices of items got out of reach. On top of that, the Russia-Ukraine war resulted in soaring gas prices at home and abroad. In addition, some companies have paused hiring, while others have laid off workers amid fears of a recession. All this means people either don't have enough money to meet expenses or their buying power has weakened considerably.
The current economic situation may force many people to turn to debt. Some may not meet lenders' minimum household income requirements. However, some lenders may factor in a steady income stream in addition to how much you take home each month.
Related: Best Personal Loans for Bad Credit
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What is a low-income loan?
The government defines a low-income person as someone whose taxable income for the previous year is below 150% of the poverty level. This low-income level is estimated to be about $14,580 annually for one person in the U.S. However, different states have their criteria.
Low-income loans are generally suitable for people with bad credit history because these lenders focus on your income (aka your ability to pay off debt), not your credit reputation. Other than how much you make, these lenders also consider the family size and area of residence.
According to Census.gov, there were 37.9 million people below the poverty line in 2020. This figure represents an increase of 3.3 million over 2019. The poverty rate in 2021 was 11.6%.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
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How can you qualify for a low-income loan?
As noted, each lender has its own eligibility criteria, but in general, you ought to meet these two requirements:
- Have an annual income of less than $14,580.
- Have a permanent job so you can make loan payments promptly.
However, even if you meet these primary requisites, a lender may ask for other documentation, such as alimony, child support, welfare benefits, debt-to-income ratio, and credit history. But to ensure you get the money, you could apply for less money or consider a co-signer or a joint loan. You should also pay off any current debts to lower your debt-to-income ratio.
Best low-income loan lenders
Avant
Avant offers personal loans for various uses, including in emergencies, for refurbishing homes, wedding expenses, or consolidating debt. It allows borrowers with low or poor credit scores to apply for loans. To ensure you're quoted the correct rate, Avant does a soft credit check, which shows up on your credit report but doesn't affect your score. Loans are funded as soon as the next business day.
You can take out loans between $2,000 and $35,000 at an annual rate (APR) of 9.95% to 35.99%. Loan terms stretch from two to five years, depending on a few factors, including your loan amount and the interest rate you're charged. Avant's eligibility requirements include:
- A minimum credit score of 550.
- A monthly net income of $1,200, including alimony or other types of income.
- A debt-to-income ratio of 70%, including mortgage loans or rent payments.
Upgrade
Launched in 2017, Upgrade offers personal loans for relocation, home renovations, medical or personal emergencies, starting a business, or consolidating one’s debt. The company's unsecured loans range from $1,000 to $50,000 at an 8.49% to 35.99% APR. The rates are fixed, meaning you have a predictable schedule of monthly installments. You can repay the money in two to seven years.
But Upgrade's best thing is that it doesn't have a credit score or minimum income requirements, making it a go-to lender for low-income people with bad credit. However, the company has a debt-to-income ratio requirement of 75%, including mortgages. The company's loan processing time window is also relatively short, and it disburses loan funds the day after the application's approval.
Upstart
Upstart is an artificial intelligence-powered company that connects borrowers with lenders. Loan amounts range from $1,000 to $50,0000 at an APR of 4.6% to 35.99%. You can repay the loan in fixed monthly payments over three to five years. The company doesn't do a hard credit check, meaning your credit score doesn't take a hit.
Upstart doesn't have minimum credit score requirements, which means it is suitable for people who do not have a credit history or individuals with a negative credit history. However, the company requires that your income be at least $12,000. You must also be employed or provide proof of some other source of income. Upstart offers services in all 50 states and funds loans within one business day.
Rocket Loans
Rocket Loans is a lending platform that offers unsecured personal loans to U.S. citizens and permanent residents other than in Nevada, Iowa, and West Virginia. The company was launched in 2016 and provides loans to borrowers for automobiles, medical bills, vacation expenses, debt payoff, home improvements, etc.
You can take out loans of $2,000 to $45,000 at an APR of 9.11% to 29.99%. The company does not charge any prepayment fee if you pay off your debt early. Eligibility requirements include a credit score of at least 640 and a minimum annual income of $24,000. With a mortgage, you must also have a debt-to-income ratio of 40%, or 70%. The company funds loans in one to three business days.
Achieve (Formerly FreedomPlus)
Achieve offers loans for refinancing debts, paying for a wedding, a family emergency, or other expenses. It lends through Riverbank and MetaBank. However, the company doesn't issue loans to Hawaii, Kansas, Colorado, Connecticut, Vermont, North Dakota, West Virginia, Wyoming, and Wisconsin residents.
The company charges an APR of 7.99% to 29.99% for loans ranging from $5,000 to $50,000. Repayment can be made in two to five years. To become eligible, you must have a credit score of 600 or above and a debt-to-income ratio of 45%. There's no minimum income requirement; however, you must not have filed for bankruptcy in the last two years.
Best Egg
Best Egg's loans can be used for various purposes, including debt consolidation, home improvements, medical expenses, relocation, travel, weddings, or a large purchase. The company offers loans of $2,000 to $50,000 at an APR of 8.99% to 35.99%. The loan repayment term stretches over three to five years.
If you'd like to apply, you should have a debt-to-income ratio of 40%, or 65% if you have a mortgage and a credit score of at least 600. At $3,000 per annum, Best Egg's minimum income requirement is among the lowest. You must also provide proof of income, but the best part is that part-time employees can get a loan through Best Egg.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
Summary of best low-income loans
Lender | Minimum income requirement | Loan amount | APR | Loan length |
Avant | $1,200 per month | $2,000 to $35,000 | 9.95% to 35.99% | Two to five years |
Upgrade | None | $1,000 to $50,000 | 8.49% to 35.99% | Two to seven years |
Upstart | $12,000 per year | $1,000 to $50,0000 | 4.6% to 35.99% | Three to five years |
Rocket Loans | $24,000 per year | $2,000 to $45,000 | 9.11% to 29.99% | Three or five years |
Achieve | None | $5,000 to $50,000. | 7.99% to 29.99% | Two to five years |
Best Egg | $3,000 per year | $2,000 to $50,000 | 8.99% to 35.99% | Three to five years |
Alternatives to low-income loans
Credit cards
With credit cards, you can spend money within the bounds of the previously specified credit limits. You can avoid paying interest rates and maintain a good credit history by repaying the balance in full each time. Some credit cards offer a 0% introductory interest rate for a fixed period. Additional protections like warrantees and extensions can be offered if your credit card supports any such program. Credit cards are preferable for people with good credit because it affects your interest rate and loan terms.
Cash advance
A cash advance is a short-term loan issued by a credit card company. While it gives you access to fast cash, these loans come with high interest and fees. Cash advances are reasonable for a borrower in dire need of money and minimum resources to get it through the traditional channels.
Payday loans
Payday loans are very short-term but come with high interest rates. Loan lengths are typically two weeks because the money must be paid back to the lender whenever your paycheck hits. While these loans charge an excessive rate, each state has its own rules and regulations that mandate these lenders to put the interest rate within a reasonable limit for borrowers.
Family and friends
Another alternative to low-income loans is borrowing money from friends and family members. Such loans can incur lower interest rates and lead to financial problems and relationship damage. Being clear about the repayment timeline and having a paper trail can be used to secure both financial and family relationships.
Use Quicken Loans to Get a Personal Loan
- If you're tight on cash right now, you may want to consider getting a personal loan. A personal loan is a loan that you can use for just about any purpose like: paying off other debt, renovating your home, or family needs like a wedding or adoption.
- TrustPilot Rating 4.6 out of 5
- Connect with lenders for $0
- 100% online experience.
The bottom line
Low-income loans are designed for people below a certain income threshold. But while the U.S. government considers anyone making less than $14,580 per year a low-income individual, nearly every lender’s minimum income requirements are considerably lower, making these loans accessible to low-income borrowers. These loans come with fixed interest rates, which means you know exactly how much you will pay each month and how long. And as the Fed takes a hawkish stance, higher interest rates won’t affect your installments.
But for some lower-income borrowers, these loans may not be suitable, especially those with a low credit score. If that's the case, you can consider other loan options, such as payday loans.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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