No-Income-Verification Personal Loan Need-to-Knows

Kelly Boyer SagertUpdated January 26, 2024

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent, and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or network providers. Read more about our Editorial Guidelines and How We Make Money.

Whether a loan applicant has no income or has income that is challenging to verify, there are some methods of pursuing personal loan approval. Below we work through the nuances of no-income loans and how you may get a personal loan without income verification.

What Is a Personal Loan?

When someone applies for a personal loan, they are requesting to borrow a lump sum of money and then pay it back over a series of regular installment payments. Lenders offer this type of installment loan with a wide range of interest rates and terms, with some being secured (requiring collateral) and others unsecured (not requiring collateral). Funds can typically be used for multiple purposes from bill consolidation to home repairs, wedding planning, and others.Rates and terms can be more favorable for people with good to excellent credit scores. But what is considered a good credit score and what is considered a bad credit score can vary by lender. It’s a good idea to check your credit report before you start the loan application process to make sure it doesn’t include inaccurate or erroneous information. You can get a free credit report annually from each of the three major credit reporting bureaus at AnnualCreditReport.com. Just reviewing your credit report won’t supply your actual credit score, but you may be able to get this information from your credit card statement if your credit card issuer offers this as a benefit. Another option to see your credit score is to create an account with a reputable financial website that offers this as a free service. If your score is too low to qualify for favorable personal loan rates and terms, some tips on how to build a credit score are:

Making regular debt payments. Late or missed payments can negatively affect your credit score. Setting up automatic payments of at least the minimum amount due on loan principal and interest each billing period is a good way to keep your payments current.
Not overextending yourself financially. Keeping your debt load at a manageable amount in comparison to your income, and generally using no more than 30% of your available credit, is something lenders will take into account.
Consider leaving old credit accounts open. You may be tempted to close old, unused credit accounts, but that might not be the best practice. It may work in your favor not to use the available credit on a particular account because that will lessen the percentage of overall available credit you’re using. Paying a small monthly bill (perhaps a subscription service or a utility bill) with this account is one way to avoid having it closed due to inactivity.

Why Get a Personal Loan With No Income Verification?

If you’re in need of cash and you don’t have verifiable income, then options may be limited, and a personal loan with no income verification may be the best way to get the necessary funds. Note that no-income loans typically come with significantly higher interest rates and, likely, limits on the amount that can be borrowed. Fees may also be higher and repayment terms shorter, especially with unsecured personal loans applied for with no proof of income. Recommended: Can You Get a Personal Loan Without an SSN?

Personal Loans With No Income Versus No Income Verification

Some lenders will offer no-income verified assets (NIVA) loans. With this type of loan, the applicant puts up assets for collateral and the lender verifies their value before loan approval. The benefit of a NIVA is that it allows a consumer to get loan approval without income. A disadvantage is that if the loan goes into default the lender will likely keep the collateral. In other situations (such as when a person is self-employed), they may have sufficient income for a personal loan, but it’s more challenging to prove the amount to the lender’s satisfaction. Here’s more information about personal loans for the self-employed with no proof of income.Recommended: Guide to Personal Loans Without a Bank Account

Proving income while self-employed

Briefly consider the loan approval process from the lender’s perspective. They want to evaluate risk to determine how likely it is that a borrower can pay back the loan. One key factor is the person’s income, and proving that may not be straightforward for a self-employed person. That’s because they don’t have the W-2 forms issued by employers each year to use when filing taxes. So, a person in this situation has to go another route to provide self-employed proof of income.

Options for Personal Loans Without Income Verification

When the income verification process is challenging for a consumer, lenders may offer different options to help the applicant get approved for a consumer loan:

Cosigner

Having cosigners on personal loans is a time-tested way for lenders to feel more secure about approving an application. Typically, a cosigner is used to provide reassurance of repayment when the main applicant doesn’t have enough income for approval on their own or has a lack of credit or less than stellar credit scores. If you don’t have enough verifiable income on your own, having a cosigner may allow you to get personal loan approval. Recommended: What Is a Guarantor on a Loan?

Collateral

If you can’t get a cosigner or you decide not to go that route, a loan that’s secured with collateral may be the best solution. In this scenario, you’d pledge an asset (e.g., real estate, vehicle, savings account, certificate of deposit) to help the lender to feel more comfortable about approving the personal loan. A secured personal loan will likely have a lower interest rate than an unsecured one, which is a plus. If payments aren’t made on loans with collateral, though, the lender can seize the collateral.

Excellent credit

Credit scores provide insights into how responsible a borrower is because past behavior is a good indicator of future actions. Having excellent credit is a positive sign and may be enough for a lender to approve a personal loan even when you can’t fully verify your income. There are personal loans for a credit score under 550 available from certain lenders, but it may be difficult to qualify without income verification.

Personal Loans for the Unemployed

Each lender can have unique requirements for their personal loans and some may approve loans for applicants who are currently unemployed. They may ask to see tax returns and bank statements to get an overall sense of the applicant’s longer-term financial picture.If you are currently receiving unemployment benefits that will end soon, a lender may not be assured of your ability to repay the loan. Sources of income that may help include retirement or pension income and Social Security benefits (including disability and survivors benefits). Investment income can help and so can rental income if you own property. Perhaps you have a side gig. If so, if you can prove your self-employment income through methods approved by the financial institution, this can also contribute to the income the lender will consider.If you receive child support or alimony, you can list these forms of maintenance. That said, a lender can’t require you to disclose this information.

Low-Income Personal Loans

Lenders may have minimum income requirements that a person must meet before getting a personal loan approved — and, if that’s the case, that minimum amount can vary widely by the lender. If a lender offers low-income loans, the qualifications are likely very similar to other personal loans. Funds are approved for a certain interest rate and term, disbursed in a lump sum, and paid back in installments. The lender may charge origination or late fees, in addition to other potential fees and charges. Some lenders may charge a prepayment penalty for paying the loan off early. If you’re looking for a loan based on income, lenders will likely look at your income as well as your debt-to-income (DTI) ratio to assess your ability to afford the loan payments. A DTI ratio is expressed as a percentage that indicates how much of your gross monthly income would need to be used to satisfy your monthly debt payments.Lenders will also look at your credit scores and past repayment history when evaluating a loan application.

Alternatives to Personal Loans

Before deciding to go through the personal-loan-no-income verification and approval process, you might want to consider alternatives.

Home equity loan or home equity line of credit (HELOC)

Both of these loans are secured with collateral — your home. It may be easier to get loan approval for this type of loan than for a personal loan, especially if your credit scores aren’t high enough to be approved without collateral. These may also be alternatives to consider if you need to borrow a large sum of money.

Borrowing from friends or family

If considering this as an option, be careful to outline each party’s responsibility to limit misunderstanding, hurt feelings, and potential damage to the relationship.

Credit cards

If you already have a credit card account, you may opt to use those available funds rather than apply for additional credit in the form of a personal loan.

Compare Personal Loan Options With Lantern

If applying for personal loans is your next step, Lantern by SoFi may be worth considering. It’s quick, easy, and convenient to compare rates. All you need to do is fill out one application to receive offers from lenders in our network.

Photo credit: iStock/AntonioGuillem

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About the Author

Kelly Boyer Sagert

Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.

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