Low income loans

What personal loan options do I have if I have a low income?

• Personal loans for small amounts. Some lenders and traditional financial institutions offer personal loans for low income applicants as long as the amount requested is small.
• Short-term loans. A short-term or payday loan offers small amounts of funds over a limited period of time, typically between 2 and 12 months.
• Secured personal loans. Using asset security on a personal loan can often help you if you're on a lower income. This is because secured personal loans pose less risk to lenders.
• Centrelink advance payments. If you receive Centrelink payments, you may be eligible to get some of the payment early. This is known as an advance payment, which is then repaid out of future Centrelink payments.
• Low income credit cards. Some lenders offer low income credit cards if you can prove you meet minimum income requirements, usually at least $15,000 p.a. However, low income credit cards may have high interest rates, annual fees and other costs that can increase the risk of debt.
• Alternative loan options. Other low income loan options include payday loans and no-interest loans from Good Shepherd Microfinance as part of its No Interest Loans Scheme (NILS) program. Here, you may qualify for anywhere from $300 to $1,200 and are only responsible for paying back the borrowed quantity, meaning no interest or fees.

What income do I need to get a loan?

Although some lenders list a minimum income requirement, other lenders do not. If a lender sets no minimum income requirement, then look at the other requirements to make sure you meet them.

• Short term loans
• Personal loans

How to compare low income loan options

Make sure you take the following factors into consideration when comparing different loans:

• Interest rate. Interest charges add to the overall cost of borrowing money, so it's essential to check this rate and compare it to other options. Also, be aware that with variable interest rates, the lender could change the rate you pay on your loan.
• Comparison rate. The comparison rate takes into account both the lender's interest rate and other fees charged with the loan. This can help you get a better idea of the overall cost of a loan.
• Fees and charges. These include ongoing fees such as monthly or annual service charges, as well as one-off fees such as application fees and early repayment fees.
• Loan term. This is the length of time in which you’re required to pay back the loan. Personal loan terms can range from a few months (for short-term loans) to five or more years.
• Repayments. Loan repayments are typically monthly, fortnightly or weekly for a set amount of money. This makes it important to check the required repayment amount before applying. It's also worth checking whether or not a lender accepts additional repayments or variations.
• Minimum and maximum amounts. Loans may have requirements around the minimum and maximum amount that can be borrowed. This is an important feature to check so that you can make sure you don't borrow more (or less) than what's required.
• Secured vs unsecured. Some lenders may require collateral, such as a home or business equity, as security for your loan. This means if your loan goes into default status, your lender has the right to seize any collateral you have committed as security for the borrowed money.

What can I use a low income loan for?

Home improvement

Whether you're refitting the kitchen or doing some much needed maintenance, a personal loan could help fund your home renovations.

Holidays

Personal loans help lots of Australians finance their dream getaway.

Weddings

Don't worry about saving up for years, you may be able to use a personal loan to finance your big day.

Cars

Whether you're looking for a new or a used car, motorbike, or caravan; a car loan can help you to finance the perfect vehicle for your needs.

Car repairs

If your car needs repairs and you need to get on the road, a car loan could help get you back in the driver's seat.

Debt consolidation

Consolidating your debt, be it other personal loans, credit cards or a combination of the two, could save you money and relieve stress.

Medical expenses

Medical procedures can be expensive, and insurance doesn't always cover everything. Luckily, there are a number of lenders that specialise in medical loans.

Education

If you're a student or doing an apprenticeship, you may want to apply for a personal loan to cover your costs.

What to watch out for

• Falling into too much debt. Make sure you avoid a situation where you get into too much debt. This means you must carefully weigh your future monthly income with your monthly repayments on any loan you commit to. Also, make sure to avoid applying for a loan amount that’s more than what you actually need.
• Applying for too many credit products. Lenders can see exactly how many times you’ve applied for loans. Applying for several loans within a short period of time increases the risk for lenders, which can make it harder to get approved.

Have more questions about borrowing on a low income?

What if I’m unemployed?

It may be possible to qualify for certain types of credit if you can show you receive some sort of income, whether from Centrelink payments, self-employed income, or other forms of regular deposits into your bank account such as share payments. Find out which lenders may consider applicants who are unemployed.

How much can I apply for?

This depends on the particular lender and type of loan you’re applying for. For instance, if you are applying for a short term/payday loan, you can usually access funds from $100 to $2,100, depending on the lender and your circumstances. However, if you have assets that you can use as loan security, you can generally access up to 100% of the asset's value in finance, even if you are on a lower income.

Please keep in mind that applying as a low income earner would likely mean you’d qualify for a lesser amount, or a potentially higher interest rate than a borrower with higher income.