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 earn a lower income, getting approved for financing can feel like an uphill battle due to minimum income requirements in a lender's eligibility criteria. But don’t despair, there may still be options available for low income earners. 

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.

Personal loans for low income earners may not come packaged as a traditional loan. If you need extra cash, it may be worth considering the pros and cons of some alternative options:

1. Small loans – Lenders may approve personal loans for small loan amounts that a borrower may have a more realistic chance of paying back. Use RateCity's Borrowing Power Calculator to discover the loan size you may be able to comfortably service based on your income. 
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), but typically carry very high interest rates and high fees.
3. The No Interest Loans Scheme (NILS) – 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. Buy now, pay later – While not a personal loan, buy now, pay later platforms may be another option worth considering for low income earners that need 'credit'. The application process is typically less stringent than a traditional loan. But keep in mind that missed repayments can incur late fees and credit score penalties. 

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 you may want to consider before applying:

Unfortunately, it is next to impossible to gain personal loan approval if you are not earning an income. 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