Have you been thinking about taking out a quick personal loan, but you’re unsure if you can afford it on your salary?
If you’re uncertain about whether you’ll be approved, don’t worry.
We here at Sunny Loans UK can help. While a good salary is great, it isn’t the overall deciding factor when lenders are assessing your eligibility.
What Is The Minimum Salary For A Loan?
Lenders have several requirements they will keep in mind when deciding whether you are eligible for a loan. However, not all lenders identify your salary as a deciding factor for their approval.
Some lenders, such as the Post Office, indicate that you need a minimum salary of £12,000 when applying for a personal loan, but this isn’t the rule for everyone.
If you want to apply for a loan, there’s more than one deciding factor that you need to consider.
All lenders have different requirements, so it is essential that you do your research on the other factors that lenders may consider.
The good news for you is that we know exactly what factors that lenders consider.
What Do Lenders Consider When You Apply For A Loan?
Lenders will look at applications for a loan application and take several factors into account.
While your salary may impact this, they don’t necessarily have a minimum number to consider. Instead, they will take a look at your financial situation. You can expect lenders to take a look at:
- Credit history
- Current debt
- Other financial commitments
When lenders offer a loan, they want to know whether you will pay back the amount that you are given in that time frame.
Lenders need to ensure that no matter the type of loan, that you have the resources to pay them back, especially if you’re in a job for an extended period of time.
While they may consider your salary in some cases, it’s not a deciding factor for them.
How Long Do You Have To Work Before You Apply For A Loan?
Even if you have a high salary, the length of time you’ve spent in your current role is important.
We believe that most lenders expect you to have been in your role for a minimum of three months, but they may look at your employment history.
The amount of time you spend in your job is important, however, some lenders may prefer that you be in your role for six months.
When lenders look at your employment history, they will look at your two most recent payslips.
Using these payslips, they’ll be able to see how much you have been earning, and if it is a stable income.
If you move from job to job, you might struggle to find a lender who will approve a personal loan.
This is because they need to be certain that you won’t default on any repayments, or else this could have a negative impact on both you and the lender.
What If You’re Looking For A Loan When Unemployed?
We know that everyone falls upon hard times. If you’ve been made redundant or you’re struggling to find a new job, you might consider whether it’s possible for you to get a loan.
We’ve mentioned how there isn’t a minimum salary requirement for a loan, and they might look into your income, but there’s another factor that they consider.
Your credit score is an essential factor that they may consider.
While finding a loan while unemployed is difficult, it’s not impossible if you have a good credit score.
However, we here at Sunny Loans UK can only recommend you get a loan if you’re confident about repaying it monthly.
If you fail to pay back your loan, you may find yourself falling into debt and damaging your credit score.
For example, there is a chance you could apply for a loan while you are claiming benefits. However, you would need to contact a specialist lender, not a high street bank.
You could apply for a budgeting loan, so these could be helpful if you’re on universal credit or other benefits.
However, you most likely won’t be approved for a loan if you’re relying on job seekers’ allowance, housing benefits, pension credits, or income support, as these aren’t seen as regular income.
If you do take out a loan, you may be subject to higher interest rates, so you need to be confident that you can pay your loan back.
The best way to check you can pay a loan is through a loans calculator.
What Kind Of Loans Can You Get With A Low Income Salary?
If you have a low income or you’re unemployed, then you can qualify for loans but they may have a higher interest rate.
While a payday loan may be tempting, we wouldn’t recommend them if you’re already struggling with your finances, as these can put you into further debt.
However, if you want to know all of your options, here are a few you can consider.
Specialist Loans For Bad Credit
There are lenders who prefer to focus on the bad credit market so they can offer deals for those who may struggle getting a loan otherwise.
While you can’t borrow much, the interest rates tend to be higher for these.
Lenders prefer these as they have less risk attached to them. You need to include an asset for security, so you can put up your house or car.
However, if you can’t repay the loan, your home or car may be repossessed.
High-Interest Personal Loans
If you find the right lender, they may accept borrowers who are on benefits. However, the risk for these tends to be higher for borrowers, as the interest rate is considerably higher than normal.
Depending on whether you have friends or family ready to help you out, you could apply for a guarantor loan.
These are similar to personal loans, but a friend or relative may repay the loan for you if you default. With these, both you and your guarantor are liable for payments.
If you can afford them, then you could apply for a payday loan. We here at Sunny Loans UK would encourage you to only apply for this if you can afford it.
These have higher interest rates and shorter repayment terms, and there will be harsh penalties if you don’t repay them on time.
These are similar to payday loans in that you shouldn’t take these loans if you can’t afford them.
The lender will visit your home to collect the money, and you can borrow up to £1000 but interest rates are notoriously high.
Buy Now Pay Later
While this isn’t a loan, you might benefit from these if you want to make a larger purchase but can’t afford it all at once.
So long as you repay them, there are no issues with Buy Now Pay Later Schemes.
Overall, there’s no minimum salary requirements for a personal loan, but you will need to do your research to see what lenders are looking for.