What are Low-Income Loans, and How Do They Work?

A financial emergency can be even more stressful for those who are earning a low income. For those who are already feeling the pinch of dealing with everyday expenses, an unexpected car repair or medical bill can quickly make their financial situation worse.

Some lenders offer low-income loans, which may help you get access to cash when you need it the most. However, many of these loans come with high interest rates. It’s important to carefully consider these costs, understand how these loans work, and weigh their pros and cons before you make a decision.

Top 5 Low-Income Loans in 2024

Finding a low-income loan that fits your needs can be difficult, given there are so many options available. To make the process easier, we evaluated 20 personal loans based on their minimum income requirements, credit score requirements, loan amounts, annual percentage rates (APRs), repayment terms, and customer reviews to pick our top five recommendations.

1. Upgrade: Best for No Minimum Income Requirements

• Loan Amounts: $1,000 to $50,000
• APR: 8.49% to 35.99%
• Loan Terms: 24 to 84 months
• Minimum Credit Score: 580
• Minimum Income: No minimum requirements

Upgrade doesn’t have any specific minimum income requirements and has a relatively low minimum credit score requirement of 580. This is also a good option for borrowers who only need money for smaller expenses since you can borrow as little as $1,000.

Pros

• No minimum income requirements
• Low minimum loan amounts
• Low credit score requirement of 580
• User-friendly mobile app
• Prompt funding, when approved

Cons

• High maximum APR of 35.99%
• High origination fees of up to 9.99%

2. Universal Credit: Best for Low Minimum Loan Amounts

• Loan Amounts: $1,000 to $50,000
• APR: 11.69% to 35.99%
• Loan Terms: 36 to 60 months
• Minimum Credit Score: Not specified
• Minimum Income: No minimum requirements

Universal Credit is another great option if you want to borrow amounts as small as $1,000. The lender has no minimum income requirements and offers loans throughout the country except in Washington, D.C.  

Pros

• No minimum income requirements
• Fast approval
• Pre-qualification option to check rates

Cons

• High maximum APRs
• Origination fees of up to 9.99%
• Doesn’t disclose other qualification requirements

3. Upstart: Best for Bad Credit Borrowers

• Loan Amounts: $1,000 to $50,000
• APR: 7.80% to 35.99%
• Loan Terms: 36 or 60 months, only
• Minimum Credit Score: 300
• Minimum Income: $12,000 annually

Upstart offers loans to borrowers with bad credit and no credit as long as they have an income of at least $12,000 a year. However, you’ll pay a higher interest rate as well as an origination fee of up to 12%.  This one-time, non-refundable fee is automatically deducted from the loan before it's delivered to the borrower.

Pros

• Offers loans to borrowers with no credit history
• No prepayment penalties
• Low minimum income requirement
• Most approvals take less than 2 business days

Cons

• Only two repayment terms to choose from
• High origination fees of up to 12%

4. Avant: Best for Fast Funding

• Loan Amounts: $2,000 to $35,000
• APR: 9.95% to 35.99%
• Loan Terms: 24 to 60 months
• Minimum Credit Score: 580
• Minimum Income: No minimum requirements

You don’t need great credit or high income to qualify for a low-income loan from Avant. You can borrow up to $35,000 and get the funds in your bank account as soon as within one business day once your loan is approved. However, compared to many other lenders, Avant has higher APRs.

Pros

• Quick funding (loans are typically approved within one day and deposited to your bank account the next day)
• No minimum income requirements
• Flexible loan terms
• A convenient mobile app to manage your loan

Cons

• No joint loans
• Relatively high APRs
• Origination fees of up to 9.99%

5. Best Egg: Best for Larger Loans

• Loan Amounts: $2,000 to $50,000
• APR: 8.99% to 35.99%
• Loan Terms: 36 to 60 months
• Minimum Credit Score: 600
• Minimum Income: No minimum requirements

Best Egg doesn’t have any minimum income requirements. However, you’ll need an income of $100,000 if you want to qualify for lower interest rates. There are no prepayment penalties or late fees, but you’ll need to pay an origination fee.

Pros

• Flexible due dates
• Free credit scores
• No annual income requirements

Cons

• The lowest rates are only available to high-income borrowers
• Origination fees of up to 9.99%
• High maximum APRs
• No joint loans allowed

What are Low-Income Loans and How Do They Work?

Low-income loans are personal loans available to borrowers with an annual income that falls beneath a certain threshold, often below what most traditional banks and finance companies may typically require. The U.S. Department of Education refers to a “low-income individual” as anyone whose family taxable income for the previous year didn’t exceed 150% of the national poverty level amount, which is $46,800 for a family of four in 2024.

When it comes to personal loans, however, this threshold could be any minimum income requirement that is set by the lender. Many lenders have no minimum annual income requirements at all. However, there may be other requirements you’ll have to meet, such as credit score requirements and debt-to-income ratio.  

Pros and Cons of Low-Income Loans

Like any other loan, there are certain pros and cons of borrowing a low-income loan. It’s important to consider these before you decide to apply for a loan.

Pros

• Borrowing on an unsecured personal loan can provide you temporary relief when you’re dealing with an unexpected expense.
• You can use the loan funds for any purpose you choose.
• Most lenders have an easy online loan application process and quick funding timelines.
• You’ll be able to build your credit history over time, if you consistently pay the installments on time.
• Your monthly payments may be affordable if you choose a longer repayment term.

Cons 

• You may not be able to borrow a larger amount with a low income.
• It may be difficult to qualify for most loans of this type, if you also have poor credit.
• Your interest rates can be quite high.
• You may pay a lot of interest over the life of the loan, especially if you choose a longer term. The longer your term, the longer you’ll be paying interest on your unpaid balance, and the longer it will take for your balance to come down.

How To Qualify for Low-Income Loans

You’ll have to meet the lender’s specific eligibility requirements to qualify for a low-income loan. Here are the most common requirements that most lenders will have:

• You’ll need a fair to good credit score (580 or more) for most loans. However, you may be able to qualify for a loan with even lower credit scores with some lenders.
• You’ll need to provide proof of income, such as pay stubs, W-2s, or tax returns.
• Your debt to income (DTI) ratio should not be over 45% for most lenders.
• You’ll have to provide proof of residence.

How To Compare Low-Income Loans

It’s important to compare multiple low-income loan options–before you borrow–to find one that meets your needs. Here are a few factors to consider:

• Compare the annual percentage rate (APR) of different lenders to get an accurate idea of the total cost of borrowing.  The APR will include any loan fees, costs, or charges, in addition to the interest rate, to show you the true cost of the loan you’re considering.
• Check if there are any additional fees you may have to pay, such as late fees, prepayment penalties, and origination fees.
• Compare the eligibility requirements of different lenders to see which ones you are most likely to qualify for.
• Check to see if the lender allows applying with a co-signer who has good credit and a stable income to qualify for a lower rate.
• Compare the funding times of different lenders, especially if you need money quickly.
• Read the online reviews of the lenders on websites like the Better Business Bureau (BBB) and Trustpilot.  

Where To Find Low-Income Loans?

You can get low-income loans from online lenders, marketplaces, banks, and credit unions. Unless you’re an existing customer, it’s usually harder to qualify for loans at a traditional bank. A credit union or online lender may have more relaxed underwriting guidelines.

Low-Income Loan Alternatives

If you need money for an unexpected expense but don’t qualify for a low-income loan, there are other alternatives to consider:

• Government Benefit Programs: Check Benefits.gov for a list of government benefit programs you may qualify for, such as food stamps, Social Security, and unemployment benefits.
• Peer-to-Peer Loans: Peer-to-Peer (P2P) lending platforms can connect you with investors. Loan approvals are usually easier compared to traditional banks.
• Pawn Shops: If you have no other alternatives, consider pledging collateral to get a pawn shop loan. Keep in mind that these loans can be very expensive, so they should only be used as a last resort.
• Friends and Family Loans: Ask friends or family members for help if you’re in a tough spot. Be sure to discuss interest and repayment terms in advance or draft a loan agreement to avoid misunderstandings later.

Ensure You Can Afford the Payments Before You Apply for a Low-Income Loan

While there are a lot of lenders that offer low-income loans to help you cover unexpected emergencies, home improvement, or debt consolidation, it’s important to borrow responsibly. Check your budget to ensure you can afford the debt payments before you borrow.

Before you borrow, take the time to understand eligibility requirements and compare your loan offers to find the best personal loan rates.