When you need money fast, applying for a no-income loan, such as a personal loan, could prove a good solution. But, you may have concerns that you won’t meet the income requirements needed for loan approval.
There are approximately 10.1 million unemployed Americans.1 If you’re currently unemployed or living on limited income, you might be under the impression that you won’t be able to qualify for online loans. However, you might have more options than you realize with low-income loans and no-income loans!
Keep reading to learn how these loans work and how to qualify with alternative income documents.
Typical Requirements For No-Income Loan Approval
The requirements for a no-income loan can vary from lender to lender and depending on what type of installment loan it is. However, most no-income loans will require some kind of alternative income verification and credit report check in the application process.
At least one of your credit reports from the three major credit bureaus will be pulled and reviewed when you apply for a no-income loan, such as a personal loan. Most lenders prefer to work with individuals who have a good credit rating, but what is considered good credit?
These are the five credit ratings based on FICO scores2:
- Poor Credit — 300-579
- Fair Credit — 580-669
- Good Credit — 670-739
- Very Good Credit — 740-799
- Excellent Credit — 800-850
Individuals with high credit scores are more likely to qualify for loans. Having an impressive and well-established credit history will also help a borrower gain access to competitive interest rates that lower the cost of borrowing money. However, a borrower with an extremely low credit score and a less-than-perfect credit history may have to consider applying for a secured loan.
Oftentimes, lenders will require some form of income verification before approving a borrower for a loan. Each lender will have different guidelines for the minimum income they look for, but the primary purpose of this verification is for the applicant to prove their ability to repay through scheduled monthly payments. Proof of monthly income gives no-income loan lenders the assurance they need to know you can afford to pay the loan back.
What Documents Can I Use To Get a Loan With No Income?
Lenders often accept a wide variety of documents as proof of income. But, the exact paperwork you can use varies depending on the lender and the type of loan you are applying for. Below is a list of commonly used documents to show various different forms of recurring income.
|Type of Income||Documentation Required||Commonly Accepted For|
|Salary/Wages||Paystubs, W-2 forms||Personal loans, Mortgages|
|Self-Employed Income||Tax returns, Checking account statements||Personal loans, Business loans|
|Rental Income||Lease agreements, Checking account statements||Personal loans, Mortgages|
|Social Security Benefits||Award letters, Checking account statements||Personal loans, Secured loans|
|Pension/Annuity Income||Pension statements, Checking account statements||Personal loans, Secured loans|
|Child Support/Alimony||Court orders, Checking account statements||Personal loans|
|Investment Income||Dividend statements, Tax returns||Personal loans, Business loans|
|Unemployment Benefits||Award letters, Checking account statements||Secured loans|
What Qualifies As Low-Income for Unsecured Loans?
There are lenders out there, particularly online lenders, who don’t have a minimum income requirement set in stone for their personal loans. Since lenders set their own criteria for who can borrow money from them, you will be able to find personal installment loans for a wide range of monthly or annual income.
Borrowers with lower incomes should expect to qualify for small loan amounts and higher interest rates even with a financial institution that doesn’t have a minimum income requirement.
If you have excellent credit or are offering some kind of collateral to secure the loan, then you might be able to qualify for more significant amounts and more competitive rates despite a low annual income.
Best No-Income Loans for Borrowers With Minimal Income
Though a majority of no-income loans will request some type of income verification in their application, there are still plenty of options in the lending industry for individuals who need low-income or no-income loans.
Applying for a secured loan is one way to get no-income loans when you need cash now with no job. Secured loans work well as no-income loans because they reduce the risk to the lender through collateral. A secured personal loan allows the lender protection of knowing they will lose less money even if the borrower defaults on the loan.
Many types of installment loans are secured loans, such as:
You can typically receive a more competitive interest rate when a no-income loan is secured than you would be able to get with a conventional unsecured personal loan, especially if you have little income and a poor credit score.
There are some unsecured options for low-income loans, but you might have to pay a higher interest rate unless you have a really good credit score. To be approved for an unsecured loan, you will need to show that you have the ability to make monthly payments to repay the total loan amount.
Commonly, the no-income loan options that have the most flexible qualification requirements are unsecured bad credit loans, such as payday loans. It’s important to keep in mind that no-income loans typically have extremely high interest rates.
How To Qualify for Low-Income and No-Income Loans
No-income loans work by relying on other income sources or reducing the risk to the lender in other ways. An excellent credit history can make a big difference in qualifying for the best no-income loans.
Use Other Sources of Income
You don’t need to have traditional paystubs to have acceptable proof of income to get a personal loan. There are plenty of other satisfactory income sources. For example, self-employed borrowers can offer proof of self-employed income through bank statements or tax returns.
These are a few examples of unconventional income sources:
- Rental income
- Social Security benefits
- Child support
- Retirement income
- Disability payments
- Investment income
- Alimony payments
All you need to do is prove that you are able to make the minimum payments on your loan. It doesn’t exactly matter where the income comes from, just that it’s there to repay the loan.
Apply For a Smaller Loan Amount
If you don’t have enough income to qualify for a large loan, you can always apply for a smaller loan amount to get some quick funding. With a smaller loan, you will have smaller monthly payments, which will be easier to make with a reduced income, meaning you might have a higher chance of being approved.
Get a Co-Signer
If you don’t have sufficient income to get a personal loan, you can use a co-signer in your application. By having a co-signer on your application, the lender can utilize your co-signer’s income as proof that you can repay the loan.
You can ask a family member or a friend to help you out by being a co-signer. It is important to make clear to them that they will have a legal responsibility to pay the loan if you default on it.
Alternatives to No-Income Loans
There are alternatives to traditional no-income loans for quick funding to cover expenses while your income is low. If you have a good support system surrounding you, you could ask a friend or family member to lend you some money while you get back on your feet. This could get you some temporary financial assistance without having to be concerned with interest rates.
On the other hand, many people choose to avoid mixing their personal relationships with personal finances as it can cause issues down the road.
Here are a few no-income loan alternatives:
While relying on credit cards too heavily for an extended period of time can lead to problem debt, they can make a good temporary solution for covering expenses while you get back on track with your finances.
Some credit card companies offer 0% APR promotions that could allow you to borrow money at zero interest for a year or 18 months. As long as you pay off the balance by the end of the promotional period, you will pay significantly less for the money borrowed than you would on a personal loan.
Cash advances can make another excellent short-term alternative to personal installment loans. Suppose you are looking for a cash advance for delivery drivers. You can get a cash advance via a credit card issuer or get a small cash advance loan from an online lender to cover unexpected expenses.
It’s important that you’re aware that cash advances typically need to be repaid rather quickly and come with higher interest rates. Before applying for a cash advance, ensure that you can pay it back on time and have the means to handle the charges it might accrue.
There are some credit unions and online lenders that offer alternatives to payday loans for individuals who need some temporary financial relief until their next paycheck. A payday loan will typically be paid back in one lump sum and charge incredibly high interest.
However, these alternatives give you some extra time to repay the total loan amount and offer more reasonable interest rates. You will likely need some kind of income to qualify for payday loans, but you won’t necessarily need a high income, especially if you are applying for a smaller loan amount.
The Approval Process for No-Income Loans
Here’s a step-by-step guide to help you understand what to expect when applying for a no-income loan:
Step 1: Research Lenders and Get a Pre-Approval Estimate
Start by researching various lenders that offer no-income loans. Compare the types of loans they offer, interest rates, and terms. Decide whether a secured loan or an unsecured loan is more suitable for your needs.
Some lenders offer a pre-qualification process that gives you an idea of the loan amount and interest rate you might qualify for based on a soft credit check and preliminary income verification. This step is optional but can be helpful in setting your expectations.
Step 2: Submit Your Loan Application
Fill out the loan application form provided by the lender. Attach all required documents for income verification and any other information the lender requests. But remember that many online lenders do not require documentation. Instead, you may only have to go through a bank verification process.
Once you submit your loan application, expect the lender to conduct a hard credit check as part of the approval process. This will slightly impact your credit score, so make sure you’re serious about the loan before reaching this step.
Step 3: Loan Offer and Terms
If approved for a no-income loan, the lender will present you with a loan offer. The loan offer will include the loan amount, interest rate, loan fees, and repayment terms. Read the loan offer carefully and make sure you understand all the conditions before accepting.
Step 4: Final Verification and Approval
Upon accepting the loan offer, the lender may conduct final income verification using the documents you provided. Once everything checks out, you’ll receive final approval, and the loan amount will be disbursed to you or the designated account.
Step 5: Loan Repayment
Once the no-income loan is disbursed, you’ll need to adhere to the repayment schedule outlined in your loan agreement. If a borrower fails to make timely payments, they can expect penalty fees and a decreased credit score.
FAQs About Getting a Loan With No Income
Yes, many lenders accept monthly statements as a form of income verification. If you have regular deposits, such as from rental income or Social Security benefits, this can help prove your ability to repay the loan.
Secured loans are generally easier to obtain if you have no income because they require collateral, reducing the lender’s risk. However, unsecured personal loans are also available but may come with higher interest rates.
It’s possible! Social Security benefits are often considered a valid form of income by lenders. Make sure to provide the necessary documentation to prove these benefits during the income verification process.
If you have rental income, you can use it to qualify for a no-income loan. You’ll likely need to provide monthly financial statements showing consistent rental deposits or even a rental agreement to serve as proof of this income.
Yes, pension/annuity income is generally accepted by lenders as a form of income. You’ll need to provide documentation, such as bank/credit union statements or payment stubs, to verify this income during the application process.
A no-income loan can be used to cover various medical expenses, including surgeries, medications, and emergency treatments. However, it’s essential to consider the loan’s interest rate and repayment terms to ensure it’s a financially viable option for you.
Freelancers and gig workers could still qualify for no-income loans, but the income verification process may be a bit more complex. You may need to provide several months’ worth of statements, invoices, or even tax returns to prove your income.
The Bottom Line on No-Income Loans From CreditNinja
The bottom line is that it is possible to get a personal loan with little to no traditional income. At CreditNinja, we work with all types of financial backgrounds. As long as you have the ability to make payments on time, you could qualify for a personal loan!
But remember that it’s vital to avoid late payments on a CreditNinja loan despite a low income because you could further affect your credit rating and credit history. Making all your personal loan payments on time will improve your payment history on your credit report and increase your credit score. Higher credit scores could help you get the best loan terms possible!