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Getting approved for a low-income loan may be challenging if your budget is tight. Lenders want reassurance that you can afford to make timely loan payments and pay back the total amount you borrow. If your budget doesn’t have much wiggle room, the lender may have reservations about approving you for a loan.
Fortunately, some lenders offer personal loans with low or no minimum income requirements. You’ll need good or excellent credit to qualify for the best loan terms. Otherwise, you’ll likely pay far more in interest over the loan term unless you find a more affordable alternative to access the funds you need.
9 Personal loan lenders for a tight budget
These lenders offer flexible personal loan solutions with competitive rates to consumers with tight budgets:
|Lender||Minimum APR||Loan terms|
|Information is current as of October 31, 2022. Check with the lender to see if there are updates.|
|Avant||9.95 percent||12 – 60 months|
|Best Egg||7.99 percent||36 – 60 months|
|Figure||5.74 percent||36 months or 60 months|
|Happy Money||8.99 percent||Two to five years|
|Lending Club||8.30 percent||Three to five years|
|Marcus by Goldman Sachs||6.99 percent||36 – 72 months|
|Prosper||6.99 percent||Two to five years|
|Upgrade||7.46 percent||24 – 84 months|
|Upstart||5.6 percent||Three or five years|
You can get a personal loan with Avant with a monthly income as low as $1,200. It’s easy to check your loan options, and your credit score won’t be impacted. Even better, you could have the loan proceeds deposited into your bank account just one business day following approval. And there are early payment penalties should you decide to pay the loan off early.
Best Egg does not have a minimum income requirement. However, you must earn enough to demonstrate your ability to make timely loan payments. You could take out a loan for as little as $2,000, and the starting interest rate is one of the lowest in the industry.
Figure has a slightly higher loan minimum of $5,000, which is higher than many others on this list. Still, it’s worth mentioning as you can take advantage of low APRs if you have good or excellent credit. The lender also offers a simple online application process, fast funding times, and a discounted interest rate for borrowers who enroll in autopay.
Happy Money also has a starting loan amount of $5,000. The minimum interest rate is on the lower end of what you’ll find among lenders. Plus, you can customize your loan terms to ensure they work for you, and you’ll have access to various money management tools to help improve your financial health. Be mindful that its loans can only be used for credit card and debt consolidation, so they may not be the best fit.
Lending Club’s personal loans are also accessible to low-income borrowers as there are no minimum income requirements. These loans, ranging from $1,000 to $40,000, are available in all 50 states and feature low minimum APRs and fast funding times. You can customize your loan offer, including the rate, term and payment options, to make it work for your financial situation.
Marcus by Goldman Sachs
Marcus does not charge application, origination or prepayment fees on its loans. Plus, its interest rates are low, making it a cost-efficient option for low-income borrowers. You’ll also have the opportunity to skip a payment after you’ve made 12 consecutive payments without accruing interest or fees.
You’ll need proof of earnings to qualify for a personal loan with Prosper, but the site doesn’t disclose a minimum amount. The upside is you can borrow as little as $2,000 and get a loan term of up to five years, which equates to a more affordable monthly payment. There are no prepayment penalties, and joint applicants are welcome to apply. And you’ll get a 0.25 percent rate discount by enrolling in AutoPay to help you save even more money.
Upgrade offers personal loans with competitive rates. Loan amounts start at $1,000, so you won’t have to worry about overextending by borrowing more than you need and struggling to keep up with the monthly payments. Even better, there’s no minimum income limit to qualify. You could have the loan proceeds in your bank account within one day of approval.
Upstart has flexible eligibility criteria for consumers seeking personal loans. You could get approved if you earn at least $12,000 annually, and there’s no minimum credit score requirement. Loan amounts start at $1,000, and the interest rates are also reasonable, so you could get a monthly payment that doesn’t stretch your budget too thin.
How to prepare for a loan if you have a tight budget
Regardless of the loan amount you plan to apply for, check your credit report and score to see where you stand. If you spot errors in your credit report, file disputes to have them removed, as they could be dragging your credit score down. Also, remember that the most competitive interest rates on personal loans are generally reserved for borrowers with good or excellent credit scores. So, the higher your score, the better your approval odds and chances of being offered the best terms.
Avoid submitting any other credit applications before applying for the loan. Each results in a hard credit inquiry, which could ding your score by a few points. And if you apply for too many credit accounts in a short period, your score could take a hit. Plus, you’ll be perceived as a greater credit risk in the eyes of lenders.
Most importantly, take a look at your spending plan and calculate how much of a loan payment you can comfortably afford. Since there’s little wiggle room, you want to be realistic about your current expenses and income to determine an accurate figure. It’s also helpful to use a personal loan calculator to estimate projected monthly payments based on the loan amount, term and interest rate.
Types of loans that work if you don’t have a lot of money
If money’s tight and a low-income loan doesn’t quite work for you, consider these alternatives:
- Credit union loan: Some credit unions offer emergency loans to their members in small quantities. These loans are often referred to as payday loan alternatives. They are sometimes reserved for individuals with low income or credit issues that would have trouble qualifying for a personal loan elsewhere.
- Payday loan: These short-term loans cater to borrowers with bad credit but come at a steep cost and should only be used as a last resort. You could pay up to 400 percent in interest, and most loans are capped at $500, payable on your next payday.
- Secured personal loan: You’ll need collateral to get a secured personal loan. It will be at risk for seizure if you default on the loan. Still, some consumers take out these loans since they have less stringent eligibility requirements. You could qualify for a lower interest rate than you would with a traditional unsecured personal loan.
- Pawnshop loan: Also secured by collateral, pawn shop loans are available to low-income borrowers. You’ll have to hand your item to the pawn shop to get cash, and they’ll retain custody of it until you repay the loan (plus any applicable interest) in full. But if you default on the payments, the pawnshop will sell your item to recoup its losses.
What to look for in a lender
Several lenders have small personal loan minimums, but only some are worthy of your business. So, explore what each has to offer when shopping around. Pay attention to the interest rates and loan terms they offer, along with any fees you’ll pay when taking out a loan. Since you’re working with a small budget, you must steer clear of lenders that charge application, origination, processing or other fees to avoid stretching your budget too thin.
Also, ask about eligibility requirements to ensure the lender is a good fit. Don’t forget to review ratings from past and current borrowers and confirm that they’re licensed to do business in your state to ensure they’re a reputable option.
If you have a tight budget and need a personal loan, some lenders can lend a helping hand. Be sure to research lenders and get at least three loan quotes before formally applying for a loan. But if you can’t get approved for a low-income loan, consider a credit union loan, as it’s a cost-efficient alternative. Or if you’re dealing with a severe financial emergency, a secured personal loan, payday loan or pawnshop loan can be used as a last resort.