Are Personal Loans Based on Income?

February 19, 2019

There are many variables that lenders look at when giving out personal loans, such as a potential borrower’s income. If a person is thinking about obtaining a personal loan, and they have a non-traditional source of income, they may have a lot of questions. They may be wondering about the other qualifying factors that lenders look at when determining loan value and eligibility.

Here is more information about qualification for personal loans and the crucial role of income.

What Factors—Along with Income—Are Personal Loan Based On?

A personal loan’s value and eligibility will be determined by the following factors:

An Individual’s Income

Lenders, for almost any loan, will look at a potential borrower’s income. This will show them whether a lender will be able to make the required monthly payments on time, and in full. Income will also give lenders an idea of what loan value an individual can afford to pay back.

An Individual’s credit

Checking a credit score can give a lender a good idea of how their potential borrower will handle repayment. A credit score is a numerical reflection of an individual’s financial habits and is used by most lenders when determining eligibility for a loan.

As a borrower, it may be helpful to check your own credit score and credit reports before seeing a lender. Doing so can keep expectations realistic, and more importantly, help spot any mistakes that need to be corrected before getting in touch with a lender.

The Amount of Debt an Individual Has

Some lenders may ask their potential borrowers about the amount of debt they currently have, and what the monthly payments for those debts look like. This can help them gauge exactly how much income an individual really has.

  • An Individual’s Employment Status

Not all lenders will look at this, but a majority will ask about a potential borrower’s employment status. Whether it is traditional, contract, or self, proof of income through the form of documentation will be required.

An Individual’s Ability to Pay Back the Loan

The lender will weigh in all the aforementioned factors to try and figure out the borrower’s ability to repay the loan.

So instead of income being the largest or most important factor, the ability to repay a loan is actually the most significant factor when it comes to eligibility and loan value.

Is There a Required Minimum of Income for Personal Loans?

There may be some who are wondering if there is a required minimum income for personal loans. Every personal loan lender is different and loan terms can range quite a bit. For this reason, there really is no minimum value of income that is expected. It is up to the lender to decide what they want to keep as a minimum requirement.

This is one reason why it is extremely important to compare several lenders when looking for any kind of loan, including personal loans. Loan financial referral services such as MaxCash can do this research work for their borrowers.

Instead of being a single direct lender, referral services work with several kinds of lenders to help their customers connect with funding. For those who are unsure about certain factors like income, a loan financial referral service can be a good place to start.

What Kinds of Income Do Personal Loan Lenders Accept?

Although all lenders are different, in the lending industry there are forms of income that most financial institutions will accept, while other forms are not widely accepted. Here is a breakdown of those:

Forms of Income that Are Widely Accepted:

  • Wages from a job
  • Self-employment income
  • Income from dividends and interest
  • Financial gifts as income
  • Awards
  • Social Security benefits
  • Non-taxable income
  • Rental or property income

Forms of Income that Are Not Widely Accepted

  • Unemployment
  • Fringe benefits
  • Income of household (unless a spouse)

Are Personal Loans Easy to Get Compared to Other Loans?

Personal loans are unique in that they can be offered as either secured or unsecured, and so they are more widely available for a range of finances. When compared to other kinds of lending, personal loans are easier to obtain due to varying qualification factors.

Because personal loans have been around for so long, there are tons of lenders out there. This availability is another factor that increases chances of being approved for this kind of lending.

If a person is thinking about applying for a personal loan, they may be curious about how much of a role income plays in the process. Income will be a crucial determining factor when it comes to the value of the loan and eligibility, but there are other factors that are just as significant, if not more.

Although personal loans are based on income, they are also based on several other important factors. Before a potential borrower decides to apply for a personal loan, it may be helpful to know those factors and what kinds of income most lenders will accept. Having this knowledge will make the loan process easier and smoother, for both the lender and the borrower.

DISCLAIMER:
The MaxCash website does not offer or provide loans, but rather, it offers a service. It should not be construed as a lending agent or broker. The site does not endorse any lenders and does not charge visitors any fees. The website owners do not evaluate potential lenders’ applications, nor do they approve or deny credit. The MaxCash website does gather applicants’ personal information and transmits it to lenders that are part of the site’s lending network. No one is required to make use of this website, nor are they under any obligation to begin contact with site operators or to attempt to secure a loan with any of the site’s lending partners. Transmission of your financial and personal information on the website in no way obligates lenders to offer you a loan or any other kind of credit product. Be aware that cash transfer times can vary, depending on the lender and the bank you use. It may be necessary to fax information under certain circumstances. All questions about loans, and any concerns you may have should be directed to your lender. These loans are intended as short-term financial solution to satisfy borrowers’ needs for immediate monetary relief. This is not intended to be part of a long-term financial plan for individuals. These services are not offered in all states. Potential borrows may undergo credit check if lenders choose to use any of the major credit reporting bureaus, including Equifax, Trans Union and Experian. They may also use other alternative sources to check credit ratings. Your request for a loan constitutes your agreement and acknowledgement that (A) your personal data may be shared with lenders and perhaps other third-party partners, and (B) lenders can acquire credit bureau reports that detail your credit history. Reports from major credit bureaus, such as Equifax, Experian and TransUnion may be obtained and used to evaluate your reliability as a borrower.

1Loan amounts by the lenders vary based on qualifications.

2Since we do not lend money directly we cannot offer you a solicitation for a loan. In all serviced states we WILL match you with a lender based on the information you provide on this website. We will not charge you for this service and our service is not available in all states. States that are serviced by this Web Site may change from time to time and without notice. Personal Unsecured Loans are not available in all states and all areas.

3Loans such as, Auto Title Loan companies typically do not have pre-payment penalties, but we cannot guarantee that every lender meets this standard. Small Business Loans typically do have pre-payment penalties and occasionally will use your car as collateral to secure the loan. Other types of loans may have pre-payment penalties as well.

4All lenders are responsible for their own interest rates and payment terms. Max Cash has no control over these rates or payments. Use of the work competitive or reasonable does not mean affordable and borrowers should use their own discretion when working directly with the lender.

5The amount of people who applied for a loan and we helped and those who received a loan is not the same. We cannot guarantee we will find a lender who will fund you. Just because you give us information on this web site, in no way do we guarantee you will be approved for a car title loan or any other type of loan. Not all lenders can provide loan amounts you may see on this web site because loan amounts are limited by state law and/or the lender. Some lenders may require you to use a GPS locator device on your car, active all the time, in the circumstance for an auto title loan. They may or may not pay for this or charge you for this. This is up to the lender and we have no control over this policy of the lender. Typically, larger loans or higher risk loans use a GPS.

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Loans such as Car Title Loans are expensive and you may have other ways to get funding that is less expensive. These types of loans are meant to provide you with short term financing to solve immediate cash needs and should not be considered a long-term solution. Residents of some states may not be eligible for a loan. Rejections for loans are not disclosed to our firm and you may want to contact the lender directly.

Signature and personal loans are only available in Georgia and Florida. Loan amounts differ at locations. Account approval requires satisfaction of all loan eligibility requirements, including a credit inquiry, and, if applicable, motor vehicle appraisal.

Car Title Loan lenders are usually licensed by the State in which you reside. You should consult directly with these regulatory agencies to make sure your lender is licensed and in compliance. These agencies are there to protect you and we advise making sure any lender you receive money from is fully licensed.

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