How much money do you need to earn to get a personal loan?

Lender	Minimum age	Minimum income	Customer type	Link
Lendable	18	£800 per month	Not specified	Read our review
Everyday Loans	18	No minimum income specified	Not specified	Check eligibility
Guarantor My Loan	18	No minimum income specified	Not specified	Check eligibility
118 118 Money	18	£700 per month	New or existing customers	Check eligibility
NatWest	18	No minimum income specified	Existing customers only	Read our review
Royal Bank of Scotland	18	No minimum income specified	Existing customers only	Read our review
Bamboo	18	No minimum income specified	New or existing customers	Check eligibility
1plus1 Loans	18	No minimum income specified	New or existing customers	Check eligibility
Zopa	20	£12,000 per year	New or existing customers	Read our review
Fluro	20	£850 per month	New or existing customers	Check eligibility
My Community Bank	21	£18,000 per year	New or existing customers	Check eligibility
Shawbrook Bank	21	£15,000 per year	New or existing customers	Check eligibility
Bank of Scotland	18	No minimum income specified	Existing customers only	Read our review
Barclays Bank	18	No minimum income specified	Existing customers only	Read our review
Ulster Bank	18	No minimum income specified	Existing customers only	Read our review
AIB (NI)	18	No minimum income specified	New or existing customers	Read our review
Halifax	18	No minimum income specified	New or existing customers	Read our review
Virgin Money	18	No minimum income specified	Existing customers only	Read our review
HSBC	18	£10,000 per year	New or existing customers	Check eligibility
Nationwide BS	18	£700 per month	Existing customers only	Read our review
Monzo Bank	18	No minimum income specified	Existing customers only	Read our review
Tesco Bank	18	No minimum income specified	New or existing customers	Read our review
Danske Bank	18	£16,000 per year	Existing customers only	Read our review
TSB	18	£850 per month	New or existing customers	Read our review
MBNA Limited	18	No minimum income specified	New or existing customers	Read our review
Abound	18	No minimum income specified	New or existing customers	Check eligibility
Lloyds Bank	18	No minimum income specified	Existing customers only	Read our review
First Direct	18	£10,000 per year	Existing customers only	Read our review
M&S Bank	18	£10,000 per year	New or existing customers	Check eligibility
Admiral	18	£19,000 per year	New or existing customers	Check eligibility
Novuna Personal Finance	21	£10,000 per year	New or existing customers	Check eligibility
Santander	21	£10,500+ for loans up to £19,999, or £20,000+ for loans between £20,000 and £25,000	New or existing customers	Check eligibility
Creation Financial Services	23	£9,600 per year	Existing customers only	Read our review
Churchill	18 years	£850 per month after tax	Not specified	Check eligibility
BetterBorrow	18 years	No minimum income specified	Not specified	Check eligibility
Reevo Money	21 years or older	£15,000	Not specified	Check eligibility
Finio Loans	18	No minimum income specified	New or existing customers	Check eligibility
John Lewis Finance	20	£12,000 per year	New or existing customers	Read our review
Loans 2 Go	21	No minimum income specified	Not specified	Check eligibility
Minty Loans	21 years	No minimum income specified	Not specified	Read our review
Toot Loans	23 years or older	£1,000 monthly income	Not specified	Read our review
Fluent Money	18	No minimum income specified	Not specified	Read our review
Plend	21	No minimum income specified	Not specified	Read our review
Oakbrook Loans	18	No minimum income specified	Not specified	Read our review
LiveLend	18	£12,000 per year	Not specified
Norwich Trust Limited	21	£1300 per month	New or existing customers	Read our review

What’s the minimum income I need to get a personal loan?

While your salary plays a part in your loan application, there is no universal minimum income requirement that guarantees you will be approved for a loan. Conversely, there’s no guarantee that you’ll get a loan even if your income is well above the UK average.

When it comes to getting accepted for a personal loan, different lenders have different criteria you’ll need to meet. Some lenders might have minimum income requirements – the Post Office asks for a minimum annual income of £12000.00 Per Annum for example. But other lenders might not and will consider other aspects of your financial situation to see if you’re eligible for a loan. This could include your credit history and current debt levels, for example.

What is the debt-to-income ratio?

The debt-to-income ratio (or loan-to-income ratio) is a simple measurement of your monthly debt compared to your gross monthly income. This lets lenders see how you’ve managed payments for what you’ve borrowed. Typically, borrowers with a high debt-to-income ratio will likely have trouble making payments.

Borrowers with a debt-to-income ratio of over 40% are generally considered experiencing financial hardship. By comparison, a debt-to-income ratio that’s about 20% or lower would be considered excellent.

Let’s say you have a total of £1,000 in bills each month, and your gross monthly take-home pay is £3,000 – your debt-to-income ratio is just over 30%. With a 30% debt-to-income ratio, you would appear as a relatively responsible borrower.

How can I tell how much I can borrow?

The first step to determining your borrowing power is figuring out whether or not you can actually afford the loan. Work out your repayments based on the interest rate, fees, loan amount and loan term of your chosen personal loan.

After you’ve done this, determine whether you can manage the repayments on your current budget. A good rule of thumb is that if you have a debt-to-income ratio of 40% or over, you should refrain from taking on any more debt.

How do lenders decide if I’m eligible?

When you submit an application for a loan, the lender will inquire about a number of details, such as your:

• Income
• Employment status
• Current debt
• Expenses
• Financial commitments
• Credit history
• Assets that can be used as security

What if I don’t meet the lender’s requirements?

There are a few things you can do if you find out you don’t meet the minimum income requirements:

• Apply for a lower amount. If you can’t prove to the lender that you can manage repayments for the requested loan amount, consider borrowing less. This will mean lower repayments for you and less of a risk for the lender.
• Choose a more affordable loan. You might be ineligible because the lender thinks the loan’s fees and interest are too expensive for you. Other loans may have lower interest rates and fewer fees and, in turn, will give you a better chance of managing the repayments.
• Try your current bank. If you have a good banking history, you probably have a better chance of being approved for a loan with your current bank. You may be able to find product details on your bank’s website.
• Find a guarantor. You could consider asking your parents, another relative or even an older close friend to be your guarantor. This person will be taking on a large responsibility because they are agreeing to take on the loan payments if you can no longer make them.

What types of loans are available for people with low income?

If you don’t earn enough to be eligible for a personal loan, there are other options to explore.

Short term loans

The most common alternative is to look at short-term or payday loans, which generally have lower requirements than regular personal loans.

However, short term loans should be paid back quickly as they are also likely to be the most expensive form of borrowing. Interest rates can be high, so these loans should only be considered as a last resort.

Loans for people on benefits

Some lenders will consider your loan application if you receive benefits. These lenders will look at any income you earn from employment, benefits or both to help them establish whether they are happy to offer you a loan. You’ll usually only find this type of loan with specialist online lenders rather than the high street banks, and interest rates are usually higher than standard loans. Some of the benefits that can be considered include:

• Universal Credit
• Child and Working Tax Credit
• Disability Living Allowance
• Child Benefit
• Employment and Support Allowance

Budgeting loans

If you’ve been receiving certain benefits for at least 6 months, you might also be eligible for a budgeting loan. These benefits include:

• Income Support
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Pension Credit

This loan can help you pay for furniture and household items, rent, clothes, costs linked to moving house, travel costs, funeral costs and maternity costs. You only have to repay the amount you borrow, and your repayments are taken automatically from your benefits.

Benefits and drawbacks of getting a loan if you have low income

If you have a low income, taking out a loan can provide some extra cash to help cover household bills or emergency expenses. Many short term loans offer funds quickly – often within the same day – making them ideal if you need the money fast.

However, the risk is that you might not be able to repay your loan on time. If you struggle to pay back what you’ve borrowed, you could damage your credit rating and find it harder to get credit again in the future. What’s more, you could find yourself in a debt spiral that’s difficult to get out of. Short term loans are extremely expensive and should be carefully considered.

Bottom line

When taking out a loan, it’s absolutely crucial to be sure you can repay it in full and on time. If you have a low income, this won’t necessarily prevent you from getting a loan, but it could make it a lot harder to pay it back. Make sure you understand what you’re getting into, how much interest you’ll be charged and have a plan to repay your loan on time.

Frequently asked questions

• Can I get a personal loan if I'm unemployed?

  It’s possible if you’re claiming benefits or a pension or you’re between jobs. Most high street banks and building societies will simply decline to offer you credit if you are not in regular paid employment. However, you still have a few options:

  • Secured loans. This would require you to use an asset as security, such as a house or car. However, this security can be repossessed if you do not keep up with the repayments.
  • Guarantor loans. With this option, you’ll need to find someone to agree to step in and make your repayments for you if you can’t.
  • Payday loans. These short-term loans come with exceptionally high interest rates and short repayment periods. It’s best to avoid payday loans, as they are a slippery slope to a mountain of debt.

• Can I get a loan if I'm self-employed?

  Yes, you can. Your options might be more limited, but you’re more likely to be accepted if you have a good credit record, can provide the relevant documents to prove your income and can afford to repay the loan.

• What does borrowing power mean?

  Your borrowing power is a term that refers to how much money you can borrow. People with lots of personal savings, high income and minimal debts have a greater borrowing power than those without.

• What is considered low income?

  Households are classed as low income if they live on less than 60% of the median net disposable equivalised household income, according to a gov.uk report.

• What if I have bad credit and low income?

  It’s possible to get a loan if you have bad credit and low income, but it will be a lot harder. You’ll have fewer lenders to choose from, and you’ll likely be charged a higher rate of interest.

• Are loans for low income a good idea?

  That depends. Although a loan could help you cover essential costs, you might find it much harder to pay back. Loans for those with low income tend to charge higher interest rates, and you could find your money problems get worse by taking on debt you can’t repay.

• What happens if I default on a repayment?

  If you miss a loan repayment, you’ll be charged a fee, and it will be noted on your credit report. If you can’t repay your loan and default, it will stay on your credit file for 6 years, even if you repay the debt. This can make it harder to get credit in the future.

To make sure you get accurate and helpful information, this guide has been edited by Holly Jennings as part of our fact-checking process.

Written by

Rachel Wait

Writer

Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio

Co-written by

Tom Stelzer

Writer

Tom Stelzer is a writer for Finder specialising in personal finance, including loans and credit, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football for publications like FourFourTwo and Man of Many. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full bio