A personal loan becomes helpful during a financial crisis. However, getting a personal loan requires a good credit score with other credentials.
Hence, do you need proof of income for a personal loan? The answer is definite yes. You need to show the lender that you have a good monthly income to ensure you can pay the loan’s monthly dues. Besides, is a personal loan variable or fixed rate?
Here, personal credit advisers cover all the aspects of this issue.
How Income Proof Matters to Get a Personal Loan
The points below are crucial to understanding why you must show income proof to secure a personal loan. Also, is LendingTree good for personal loans?
- Lenders want to know you can pay back what you borrow. Your income shows your ability to handle the loan payments.
- Your income assists the lenders to decide how much they should lend to you. If you earn more, you can usually borrow more.
- A higher income can mean lower interest rates. That’s because it makes you less risky for lenders.
- More income provides you longer to repay the loan, which might mean lower monthly payments.
- Even with a bad credit score, a good income can help you get approved for a loan.
- Lenders want to see you have a job or some way to make money to approve your loan.
Deep Review: Do You Need Proof of Income for a Personal Loan?
In the USA, your income range shows your financial ability to pay off the debt. If your annual household income is below $54,000, you belong to a low-income group population. This income usually fails to gain the confidence of the lenders.
They become unsure that you can pay off the monthly payments after meeting your monthly expenses. Following this, they decided to deny your personal loan application. So, is there any way out? Yes, there are several ways to get a personal loan without income proof. By the way, are personal loans considered income?
Ways to Get a Personal Loan without Any Income Proof
Below are some proven ways to get approved for a personal loan.
Take a Secured Personal Loan
You can take a secured personal loan if you cannot provide income proof. In this case, you provide collateral to the lender to assure them you will return the loan amount with interest. You can provide collateral like your home, car, land, etc.
However, if you do not pay back the borrowed amount, the lender will take your property from you in a legal way. You can expect to get 50%-200% of the collateral’s value as a personal loan. Furthermore, know the requirements for a personal loan.
Take a Title Loan
As per the basics, you also provide collateral to get a title loan. But, this type of loan is for very short terms; you must pay back the amount with interest within 30-60 days. If you are going for this option, we suggest you provide less valuable collateral. For example, do not provide your home as collateral, but provide your car.
When taking a title loan, you can expect to get 20%-50% of the present value of the given collateral. The lender receives the right to take that property from you if you fail to repay the borrowed amount with interest. Depending on your location, the APR can range from 300%-400%. Moreover, get the differences between a personal loan and a credit card.
Take a Loan from a Pawnshop
Local pawnshops also lend people money without asking for any income proof. In this case, you deposit any of your valuables to the lender. If you fail to pay back, the pawnshop receives the right to sell the item to any other person.
You can expect 20%-50% of the deposited item, and the APR will range from 18.99% to 40%.
Tips to Get a Personal Loan without Income Proof
Here, we give you some tips to get a personal loan if you cannot show any income to a lender.
Before applying for a loan, take a part-time job six months earlier. Lenders usually ask for bank statements for the last six months. So, if you have a good credit score, the income from the part-time job can assure the lender that you will pay back the amount.
Check out if you have any other earning source except a full-time job. The earning source can be a side hustle, share investment, earning from rental properties, earning from agricultural fields, etc. These incomes are also counted as accepted income for the lenders.