Tips to Qualify for a Loan for a Low Income Earner

Have you ever found yourself in a situation where you were just short of meeting an important financial goal or getting something essential for your household, like a car, computer, or washing machine? If so, you might qualify for a low income loan.

To qualify, you generally need:

• Proof of income and hardship
• An expressed need for something that keeps your household running

Where to Go For a Low Income Loan

Here are some more details on your options.

NILS (No Interest Loans Scheme)

The Australian Securities & Investments Commission recommends NILS, the No Interest Loans Scheme. If you’re in a bind, this will help you avoid those high-interest payday loans to get some extra help.

NILS is intended to help you with essentials, like washing machines, refrigerators, athsma pumps, and wheel chairs. If you live somewhere bereft of public transit, NILS can also help you with car repair costs.

NILS loans are for needs between $300 and $1200.

How Can You Qualify for NILS?

You need to demonstrate what you need the NILS loan for as well as show a way you can repay it in 12 – 18 months. That’s it! Just be clear about what you make, what you need, and why you need it.

What About Other Options?

There are options for Aussies seeking low income loans: Good Money.

Get Help from Good Money

Good Money runs out of Queensland and Victoria. It’s not a different loan program, but a community service that helps you evaluate your different options (including StepUP and NILS). Since Good Money is a nonprofit, there aren’t any fees associated with it. In addition to helping you with the paperwork and program evaluation, Good Money can help you save money in other ways – for example, they can help you select a refrigerator that will cost less to run.

Low Income Loans: Watch Out for These Red Flags

When you’re in need of cash fast, the situation may feel desperate. You might be tempted to take out a payday loan. You can avoid that by going straight to Good Money. Payday loans are predatory, and you’ll want to exhaust all other options first. With payday loans in particular, avoid these red flags:

• High interest rate
• Very fast repayment terms
• Severe consequences (high fees) for failure to repay on time.

In short, payday loans can land you in more trouble than you might have been in in the first place. It’s best to steer clear.

The government also has financial counsellors located throughout Australia. If you’re struggling with debts, they can help you. Just call the National Debt Helpline at 1800 007 007.

Other Tips to Qualify for a Loan for a Low Income Earner

In addition to using the right resources, there are other things you can do to help your chances of securing a loan. You can show proof of:

• Paying down debt
• Increase in income (handy if you just got a new job)
• Rising credit score over time
• Stable living situation (such as staying in the same residence for more than a year)

Laying all of this out for a loan officer can make the difference between acceptance and denial when it comes to getting that loan, whether it’s a short-term household loan, a traditional auto loan, or a home loan.