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Low income personal loans

Whether you need to consolidate debt, pay for a holiday or a home renovation, a personal loan can be a competitive option when you need a financial helping hand.

If you have low income levels, getting approved for a personal loan can feel like an uphill battle. But don’t despair, there are still loan options available for low income earners.

What low income personal loan options are available?

Most lenders have minimum income requirements that all borrowers must reach to be approved for financial products – usually around $30,000 - $40,000 per annum.

While it can be disheartening if you’re not applicable for a loan, lenders do have your best interests in mind. Being unable to pay back a loan can negatively impact your finances, your credit score and your mental health.

However, many Australian lenders offer personal loans with low or no minimum income levels, including:

Further, personal loans for low income earners may not come packaged as a traditional loan. If you need extra cash there are a few options available:

  1. Small loans – Lenders may approve personal loans for small amounts that you have a realistic chance of paying back based on your income levels.
  2. Short term loans – Short term, or payday loans, are typically offered to low income borrowers by online lenders. They have shorter loan terms than traditional loans (up to a year), and typically carry higher fees.
  3. The No Interest Loans Scheme (NILS) According to ASIC’s MoneySmart, the NILS provides people on low incomes “access to safe, fair and affordable access to loans of up to $1,500 for essential goods and services”. Repayments are set up over 12 - 18 months, and to be eligible you must have a Centrelink healthcare or pension card (or qualify for one).
  4. Low income credit cards – While not a personal loan, low income credit cards are another option low income earners can consider when they need credit. They have lower minimum income levels in their eligibility criteria ($15,000 - $20,000 per annum) and may be more attainable.

How do I choose the best personal loan for low income earners?

While there is no one ‘best’ low income loan available due to varying individual financial circumstances, there are a few features and fees associated with personal loans for low income earners you should consider before choosing:

What to compare About
Interest rate The personal loan interest rate will determine your repayment amounts. A low interest loan should mean a smaller repayment amount.
Loan term The amount of time you will have to pay off the debt. This is particularly relevant for short-term loans, as longer loan terms tend to mean lower monthly bills – but more ongoing fees to pay.
Annual fees Look for low income loans that charge lower or no annual fees, if possible.
Late payment fees Amount owed if you miss a payment.
Maximum loan amount Small loan and/or short-term loans have lower maximum loan amounts than standard personal loans. Ensure the funds will adequately cover your financial needs.
Centrelink availability Some lenders will offer short-term loans to applicants on Centrelink. If half of your income comes from Centrelink, you typically cannot receive a loan that exceeds 20 per cent of your income.

What person loans are available if you’re unemployed?

Lenders will typically not provide loans to individuals with no income source as they need proof that you will be able to make regular loan repayments.

You should consider showing lenders you have a source of income outside of full-time, part time or casual employment, such as:

  • Centrelink payments
  • Self-employment
  • Capital or interest earned through assets

Frequently asked questions

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

Can I get a $4000 personal loan if I’m unemployed or on Centrelink?

Before most providers of personal loans or medium amount loans will approve an application, they’ll want to know you can afford the loan’s repayments on your current income without ending up in financial stress. Several lenders don’t count Centrelink benefits when assessing a borrower’s income for this purpose, so these borrowers may find it more difficult to be approved for a loan.

If you’re unemployed, self-employed, or if more than 50% of your income come from Centrelink, consider contacting a potential lender before applying to find out whether they accept borrowers on Centrelink.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

Are there any interest-free emergency loans?

The No Interest Loans Scheme (NILS) allows low-income borrowers to take out no-interest loans for up to $1500 to purchase essential goods and services.

There are also similar low-interest loan schemes available to borrowers in financial hardship who are having a tough time getting finance approved.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Are there low doc personal loans?

Self-employed borrowers may be eligible for low doc personal loans, which require less documentation in their application process than many other personal loan options.

It’s important to remember that though low doc personal loans may require less paperwork, you may need to provide additional security, or pay a higher interest rate.

Are there $2000 emergency loans?

If you’re having trouble being approved for a loan of less than $2000 and urgently need to purchase household essentials, there may be emergency loan options available to you.

For example, the No Interest Loans Scheme (NILS) allows low-income borrowers to take out interest-free loans of up to $1500 for essential goods and services.

For further assistance, consider contacting a financial counsellor, or calling the National Debt Helpline on 1300 007 007

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

Can I include my spouse’s income on a personal loan?

If you apply for a joint personal loan with your spouse, you can include their income on the application. If approved, they then become jointly liable for the loan.

Both you and your spouse need to meet the eligibility criteria, such as income, age, and residency requirements, as stipulated by the lender. A joint loan could increase your chance of approval for a higher amount, as both borrowers’ incomes are assessed when determining borrowing capacity. 

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

Can I get a no credit check personal loan?

Personal loans with no credit checks are available and called ‘payday loans’. These are sometimes used as short-term solutions for cash-strapped Australians. They often carry higher interest rates and fees than regular personal loans, and individuals risk putting themselves into a worsened cycle of debt.