Whether you want to pay bills, purchase a home or a new car, a loan can come in handy. However, getting a loan when you are on low income can be a bit of a task.
It’ll give you a better feeling to know that there’s a way out for low-income earners – personal loans for low-income earners. We will tell you everything you need to know to get you started with these loans. But first, let’s see some of the best low-income loan lenders
These are loans offered to low and medium-income earners by banks or other financial institutions. The loans are also a good option for individuals with a low credit score.
Please note that you are considered based on much more than just your earning. Such factors as your place of residence and your family size also matter.
You might be required to provide proof of income. The loans are available for those earning as low as $800 per month.
Low-income loans are known to carry fairly low-interest rates. They also have flexible repayment terms.
You can use these loans to pay for your education, sort out medical bills, pay rent, or take care of other personal needs.
Low-income loans may not be the easiest to qualify for. While there are a couple of requirements, your low income not always is the reason you miss out on your loan.
Different lenders consider different factors before offering you a loan. One of which is your ability to repay your loan. Here, most lenders look at your debt-to-income ratio. That is your total income compared to your total debts. Having more unsettled debts than your income might have you miss a loan.
Some lenders may also check your credit score to know your credit standing and history. An excellent credit score coupled up with modest earning can get you competitive loan offers with better terms and low-interest rates.
However, most of them will still offer you loans even with a poor credit score.
You can borrow from as low as $100 to as high as $35,000. Some financial institutions might be inclined to go even higher. It all depends on your ability to repay.
While a poor credit score might not be the reason you miss out on a loan, a stellar credit score will unlock even better loan amounts and repayment terms.
Getting a cosigner with a decent income and good credit profile can unlock better opportunities for you. A guarantor will just be as good.
Tempting as it may seem, avoid loans you won’t be able to repay. Only borrow what you can repay at the agreed terms. This way, you’ll pay it comfortably without falling into a debt cycle.
While sourcing a good low-income lender, how much you can borrow shouldn’t be the only thing you consider. Dig deep into their repayment terms, interest rate, and duration of payment.
Personal loans for low-income are flexible, carry better repayment terms, and are highly accessible. However, you’ll still incur different fees and interest.
Some governments and private institutions set aside funds in the form of personal loans for low-income earners. Most of which come with no interest or other fees.
This is mostly a collaboration between the Federal government, banks, charities, and other non-profit organizations through a program dubbed the FIDC program.
The funds are mainly donations.
You could also opt for loans from close friends and family if you’re looking to significantly cut costs. It will also save you from the risk of recurrent debts and you won’t have to worry about your credit profile.
Different lenders have different income requirements for you to access personal loans for people with low incomes.
However, the majority of lenders require that a borrower be earning about $800 per month. Meeting this threshold is the most important requirement. Though other factors such as credit score might be considered, they may not have a strong influence over the possibility of acquiring your loan as proof of your income.
In case your total income doesn’t meet the lender’s threshold, you have the option of using more than one source of income.
For instance, if you work more than one job, you can combine all the sources. The same applies to those on income and receiving some sort of benefit such as disability benefit at the same time. They can combine the two to meet the income requirement.
The qualification requirements differ from one lender to another. But, basically, anyone with a source of income and a good debt-to-income ratio can apply for loans for people with low income. A good credit report and payment history also play a major role in determining not only the amount you’ll receive but the terms and interest, too.
Most lenders have different income thresholds that borrowers should meet to qualify for low-income loans. However, the average income requirement most lenders require is a minimum of $800 per month.
If you are not comfortable with taking a low-income loan, alternatives such as taking soft loans from family and friends will suffice. Similarly, low-income loans from the Government that mostly come with reduced interest rates will help. You can also consider getting a co-signer or a cash advance.
You can borrow from as low as $100 up to $35,000. The amount you can borrow depends on such factors as your credit profile, level of income, and repayment history. Getting a co-signer with a good credit profile and a decent income can also help you access higher loan limits.
The interest varies depending on the lender, your credit score, income, and repayment history. However, loans for low-income earners carry an average APR of up to 399%.