Personal Loans for Bad Credit and Low Income

Personal loans are a type of loan that can help borrowers get fast funds to cover expenses, whether it's for home improvements, medical bills, or other unexpected costs. Personal loans are either secured or unsecured and can be obtained from banks, credit unions, and online lenders.

While having good credit and a steady income can increase the chances of being approved for a personal loan, borrowers with bad credit and low income may still be eligible for a loan. Read on to learn more about low-income and bad-credit personal loans.

How personal loans work

A personal loan can be used to cover large expenses or to consolidate debt. When you apply for a personal loan, the lender typically looks at information related to your income, employment history, credit score, and payment history. This information helps determine your creditworthiness and ability to repay the loan.

If approved for a personal loan, you will receive a lump sum to cover your expenses. You repay the loan, typically with interest, over a set period. The loan terms, including the interest rate, repayment period, and monthly payments, are agreed upon by you and the lender before signing.

Unsecured personal loans can be a good option for anyone who needs to borrow money quickly and doesn’t have collateral to get a secured personal loan. However, it's important to carefully consider the loan terms and ensure that you can afford the payments, as defaulting on a personal loan can damage your credit score and lead to additional fees and charges.

Can I get a personal loan with bad credit and low income?

Yes, borrowers with bad credit and low income can still get a personal loan, although they may face some challenges.

While having good credit and a steady income can increase the chances of being approved for a personal loan, there are lenders who specialize in providing low-income loans to borrowers with less-than-perfect credit. These lenders may have less strict requirements and may be more willing to work with borrowers who have had financial difficulties in the past.

When applying for a personal loan with bad credit and low income, you should carefully review the terms of the loan, including the interest rate, fees, and repayment period, to ensure the loan fits within your budget.

Types of personal loans for bad credit and low income

There are several types of poor-credit personal loans based on income or collateral that borrowers with bad credit and low income can consider:

Payday loans

A payday loan is a short-term personal loan you repay in full on your next payday. Payday loans are typically small amounts, usually a few hundred dollars depending on your income. Payday loan fees vary by state but average about $15 for every $100 borrowed. Lenders often have less strict requirements for this type of loan, so borrowers with bad credit and low income can still get approved.

Installment loans

When you take out an installment loan, you repay the money over time through a series of regular payments (a.k.a. installments). Unlike payday loans, these personal loans typically have more extended repayment periods and lower interest rates.

With an installment loan, you receive the money upfront and repay it in fixed payments over a period of months or years, depending on the loan terms. The payment amount and schedule are agreed upon in advance, so you know exactly how much you’ll need to pay each month and for how long.

Title loans

With a title loan, you use your car title as collateral to secure the loan. The lender holds the title until you’ve repaid this personal loan, and you can keep driving your car while the loan is outstanding.

Title loans can give you quick access to cash when you have poor credit, low income, or limited borrowing options. The amount you can borrow is based on a percentage of the vehicle’s value, which may be higher than other personal loan options.

Lines of credit

A line of credit is a borrowing arrangement in which a lender extends a set amount of credit to a borrower. The borrower can draw upon the credit limit as needed. Lines of credit are similar to credit cards in that you have access to funds that can be used and repaid as needed, up to a maximum limit set by the lender.

When you have an open line of credit, you only pay interest on the amount of credit you use, not on your total credit limit (unless you borrow the maximum amount). Best of all, you can draw on the line of credit as often as you need. Your line stays open and available even if you pay the balance in full.

Pawn shop loans

A pawn shop loan, or pawn loan, is a short-term loan in which a borrower provides collateral, such as jewelry, electronics, or other valuables, to a pawn shop in exchange for a loan. The loan amount is typically a percentage of the value of the collateral, and the borrower has a set time to repay the loan and retrieve the collateral.

Pawn shops do not typically require a credit check or proof of income, making pawn loans an option for borrowers with poor credit or limited options for borrowing. However, if you’re unable to repay the loan, the pawn shop may keep the collateral and sell it to recover the outstanding balance.

Tips for getting a personal loan with bad credit and low income

So, how do you get a personal loan with bad credit and low income? Here are a few tips:

Check your credit

Keeping an eye on your credit report can help you clear any errors and see how your financial habits affect your score. You can check your credit report for free at Some credit card companies also provide free credit score monitoring as a cardholder perk.

Compare lenders

Before applying for a personal loan for bad credit and low income, compare personal loan lenders to review their interest rates, repayment terms, fees, and eligibility requirements. You also want to consider the lender’s reputation, so be sure to read reviews and feedback from previous and existing customers to get an idea of how responsive and helpful the lender is.

Get a co-signer

If you don’t qualify for any poor credit personal loans based on income, ask a friend or family member to co-sign the loan.

A co-signer is someone with good credit who agrees to guarantee the loan by signing the loan agreement with the borrower. By doing so, the co-signer assumes equal responsibility for the loan and agrees to repay it if the borrower defaults. Having a co-signer can increase your chances of getting approved for a personal loan and may also help you qualify for a better interest rate.

Consider a secured loan

A secured loan is backed by collateral, which is an asset the borrower owns. For example, your home, car, or other property can be used as collateral to borrow funds. The collateral serves as a form of security for the lender, as it can be used to repay the personal loan if the borrower is unable to make the required payments.

When issuing a secured loan, the lender evaluates the collateral’s value to determine the maximum loan amount. The borrower may also need to provide proof of income and creditworthiness, but the value of the collateral is the main factor in determining the loan amount and interest rate. Home equity loans, pawn shop loans, and title loans are all examples of secured loans.

How to get a personal loan with bad credit and low income

Here are the steps borrowers can take to get a personal loan with bad credit and low income:

1. Check your credit report:

Before applying for a personal loan, check your credit report to ensure accuracy. If errors or inaccuracies exist, dispute them with the credit reporting agency.

2. Determine the loan amount:

Figure out how much money you need to borrow with a personal loan for low income and bad credit, along with the repayment terms you can afford.

3. Research lenders:

Look for lenders that specialize in providing low-income loans to borrowers with bad credit. Research their loan terms, interest rates, and fees.

4. Gather necessary documents:

Collect required documents, such as your ID, proof of income, and proof of residence. Depending on the personal loan lender, you may also need to provide your recent pay stubs, tax returns, bank statements, and utility bills.

5. Consider a co-signer:

If your credit and income are low, ask a family member or friend with good credit and income to co-sign the loan. This will increase your approval chances for a personal loan and may result in a lower interest rate.

6. Apply for the loan:

Fill out the application and provide all necessary documents. Be prepared to explain any negative information in your credit report.

7. Compare loan offers:

If you receive multiple personal loan offers, compare them to determine which ones have the best terms and interest rates.

By following these steps, borrowers with bad credit and low income can increase their chances of getting approved for the right personal loan. However, it's important to remember that interest rates and fees may be higher for borrowers with low income and poor credit, so shop around and compare lenders to find the best deal.

Get an Advance America personal loan

For over 25 years, Advance America has been a reputable provider of personal loans for bad credit and low-income borrowers. With a personal loan from Advance America, you can get the money you need to pay for the things that matter. Apply today!

The Advance America advantage

Since 1997, Advance America has helped millions of hardworking people with a variety of financial solutions including Payday Loans, Online Loans, Installment Loans, Title Loans and Personal Lines of Credit.
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