Can I Get a Loan on My Disability Check?

Do you receive disability payments as income, and do you need emergency money? You may ask, “Can I get a loan on my disability check?” Keep reading to learn how to use disability payments to borrow money from a lender!

Types of Disability Payments 

Many financial institutions accept alternative forms of income, such as disability payments. Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) are the two types of disability payments issued by the Social Security Administration. While both programs offer benefits to disabled individuals, there are distinct differences.  

Supplemental Security Income

Supplemental Security Income (SSI) pays benefits to individuals that are 65 or older, blind, or disabled. SSI recipients must also have limited income and assets to qualify for financial assistance. Disabilities have to last a full calendar year or result in death. It’s possible for disabled persons to receive SSI without a previous work history and without paying Social Security taxes.        

Social Security Disability Insurance

Social Security Disability Insurance (SSDI) pays individuals that have physical or mental impairments that interfere with their ability to work their regular occupation. Unlike SSI, recipients of SSDI must have a previous work history and pay Social Security taxes to be eligible for benefits. 

Can I Get a Loan Using My Disability Benefits?

Do you need money to pay upcoming bills and other high-cost expenses? Know that the Equal Credit Opportunity Act prevents financial institutions from discriminating against disabled individuals. You can potentially use your government assistance income to get fast cash loans. However, you are still subject to the lender’s eligibility criteria. 

When you apply to borrow money, lenders will assess many factors—most importantly, your credit history and income. If your credit score is low, you may find getting a great loan offer challenging. Bad credit scores affect borrowing in many ways, such as limiting your access to disability loans. Although, there are plenty of financial options designed for borrowers with subpar credit scores. But be prepared to compare loan offers as many lenders compensate for the financial risk by offering high-interest rates. 

Keep in mind the lender may require an active bank account to deposit your money electronically. While it’s possible to cash your government checks without a bank account, you may need to open a checking account to receive disability loans. Luckily you can quickly sign up for a checking account with minimum fees. You may even open a bank account with bad credit

What Other Documents Do I Need for a Loan? 

Before you sign a loan application, you need to provide the disability loan lender with documentation. You can use your Social Security disability payment checks as proof of income. However, you still need to provide other identifying documents.

Loan Application

The loan application is the initial form you fill out to inquire about emergency cash. The application form will differ depending on the financial institution you work with. Still, generally, you will need to provide basic personal information. Be ready to provide your name, residential address, phone number, email address, and Social Security number. To assess how much you may qualify to get, the lender may also ask for your estimated gross monthly or annual income. 

Proof of Residence

You will need to provide proof of your residence to sign a loan agreement. Any official government mail is usually acceptable, but you can use other documents as long as they display your full legal name and address. Typically, borrowers provide recent utility bills, lease agreements, bank statements, etc. Suppose you moved recently and need a quick change of address confirmation. In that case, you can visit a local post office in person or complete a form on the USPS website. 

Proof of Identity

The lender must verify that you are who you say you are to prevent fraudulent activity. You must also be older than eighteen to enter into a financial contract. As proof of your identification, you can provide most forms of government-issued identification. Many borrowers use a driver’s license, state identification card, or U.S. passport.  

What Are My Disability Loan Options?

A disability loan is any loan option that allows you to use your Social Security disability payments as proof of income. There are different types of disability loans you can apply for. Your best financial option depends on how much you need and when you want to repay the money you borrow. Read about some fast cash options below.

Car Title Loan

A car title loan is a fast cash option for people that do not have perfect credit. The car title loan lender uses your vehicle as collateral, and the amount you are eligible to receive depends on the equity you have in the car. Most lenders accept alternative sources of income, such as payments issued by the Social Security Administration. While it’s possible to get a lot of money quickly, keep in mind that car title loans are relatively risky. The interest rates can be excessively high, and if you fall behind on payments, you risk losing your vehicle! When a borrower defaults on a car title loan, the lender repossesses the vehicle and sells it at an auction to recoup the unpaid loan balance.    

Personal Loan

A personal loan is a convenient financing option because you can use the money for various personal expenses. Since most personal loans are unsecured, your eligibility will depend mainly on your income and credit score. Suppose you don’t receive a lot of revenue through your disability benefits. In that case, you may still get enough emergency cash if your credit score is Tier 2 or higher. 

Cash Advance Payday Loan

Cash advance payday loans are short-term loans that provide fast financial relief to individuals with almost any type of economic background. Payday lenders base eligibility on your ability to repay the loan, not your current credit score. Suppose you have the ability to repay a payday loan. In that case, you can get a cash advance against your next Social Security disability payment. The downside is that payday loans tend to have predatory repayment terms. Due to high-interest rates and extremely short repayment periods (two weeks), many borrowers get stuck in a debt spiral.     

How To Get the Best Disability Loan?

If you want to get quick emergency relief with your disability benefits, you may wonder how to get the best disability loan. The best loan for you depends on your repayment preferences and current financial background. However, you can narrow your loan options by comparing loan amounts, interest rates, and repayment lengths.  

Compare Loan Amounts

Before applying for disability loans, knowing exactly how much you need to borrow is essential. Ultimately, the more you borrow, the more you have to pay. The lender will charge interest on the total loan balance, so you will pay more for borrowing a large sum. You may also stretch your finances too thin if you borrow more money than you require to pay bills and large purchases. Suppose you need $1,000 to cover your monthly bills for a brief period. It may not be wise to accept a $2,000 loan. Taking on more debt than you need can cause you to fall behind on monthly payments and default on the loan.  

Compare Interest Rates

The interest rate borrowers obtain on disability loans determines how difficult the repayment process will end up being. When the interest rate is too high, your monthly payments will also be too high. The best loan will have decent interest rates, so you don’t end up spending a lot on interest fees. For example, suppose you get two loan offers for $2,000. One has a 25% APR and the other has a 99% APR. That’s an annual difference of $1,480! The best disability loan helps you save money on interest fees. 

Compare Repayment Terms

Decide how much time you want for repayment before you pick a disability loan. A short repayment term will cost less because you typically pay fewer interest fees. However, choosing an extended repayment length can help you get lower monthly payments. Deciding whether you want to spend more now or later can help you choose the best loan option. 

The Bottom Line 

Financial institutions cannot discriminate against disabled individuals thanks to the Equal Credit Opportunity Act. Most lenders accept alternative income documents, which means people on disability can use their Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) as proof of payment. You may qualify for disability loans if you meet the lenders’ qualifications. 

While you are free to apply for disability loans, it’s crucial to assess your financial situation first. Consider how much money you need, how much you want to pay monthly, and how long you wish to pay off the entire loan. Answering these questions can help you pick the most beneficial loan option during a financial emergency. While it’s easy to accept the first loan offer you obtain, it’s ultimately better to take time to compare lenders and loan offers.


What’s the difference between SSDI and SSI?│AARP
What Are Disability Loans, And How Do They Work?│Forbes