Alternative income source loans are available, but they’re certainly not as common as regular personal loans. That’s because the market for this type of loan is much smaller. Most people earn money through regular jobs, so lenders tend to offer products to match.
Furthermore, lenders tend to consider those that earn money in other ways riskier. That’s regrettable, since it is much more commonplace now.
Many people are self-employed, have a side gig, draw a pension, receive child support or alimony, or earn money from investments. Regardless, when these people apply for income based loans, they are often turned down since they don’t meet traditional lender criteria.
Luckily, some lenders do have broader income requirements for a loan. Consequently, you may qualify for a personal loan based on income even if you don’t earn it from a 9-to-5 job.
Still, that doesn’t mean you should run out and apply for many loans hoping you’ll get lucky. In actuality, that’s probably the worst thing you could do since your credit scores would take a dive.
Instead, use the following strategies to increase your odds of approval for alternative income based loans.
Review Your Credit
Before you start applying for income based loans, review your credit. Errors occur far more often than you might think and any error could affect your credit scores.
It is easy to get free copies of all three credit reports through AnnualCreditReport.com. Comb through each report and correct any errors. Also do whatever you can to strengthen your reports.
Additionally, you may want to consider enlisting a co-signer before you start the application process, if you have poor credit. Poor credit and an alternative income source can make it very difficult to obtain a loan based on income.
Determine the Amount You Need to Borrow
Carefully calculate the precise amount you need to borrow. Don’t add on a little extra “just in case”, because the higher amount could be enough to trigger a rejection. This is especially true if you’re trying to qualify for low income loans.
Loan amounts can be as little as $200 up to as much as tens of thousands. In some cases, you may want to consider alternatives to income based loans. Perhaps you can borrow from friends or family. If you need a small amount, you may be able to get a cash advance on a credit card. Just remember, cash advances come with high interest rates.
The same applies to payday loans. While almost anyone can qualify based on a wide range of income sources, they can be extremely expensive. However, they can be a viable choice if you want a loan without a current income source, but you’ll receive money soon.
If you have equity in a home, but need cash, you may be able to obtain a home equity loan. Those with retirement accounts may be able to take out a loan against it or make a withdrawal. However, these options have drawbacks too.
Failure to repay a home equity loan can lead to a loss of your home. Taking money out of a retirement fund can permanently impact your income later in life. As a result, a personal loan based on income or a quick cash loan may be a better choice if you can qualify.
Decide How Quickly You Need the Money
This is a huge consideration, because it greatly affects which lenders you might use. Traditional lenders are notoriously slow, while online lenders tend to be faster.
If you’re in a big hurry for a loan based on income, always check the lender’s timeline. Some offer fast access to cash within hours or days, even when you are using a less traditional income source. Others can be slow, even if they operate online.
Collect Financial Documents
If you earn through an alternative income source, lenders may handle this in one of two ways. Some lenders use digital income verification through your bank to instantly confirm how much you make. It’s quick and easy, and you don’t need to do anything other than granting them permission to do so.
Others ask you to scan and upload documents to substantiate your earnings. Obviously, this is more time consuming and inconvenient, but it may be necessary, especially if you earn an inconsistent income.
Depending on the lender, they may consider income from:
- Self-employment
- Side gig
- Alimony
- Child Support
- Pension
- Annuity
- Social Security
- Disability
- Investment dividends
- Interest
- Minimum distributions from retirement accounts
- Spouse
Self-employed persons may need to supply tax returns, bank statements, or business ledgers to verify an inconsistent income. However, contractors may qualify based on consistent bank deposits.
Get Pre-Approval Through Multiple Lenders
Some lenders aren’t concerned about how you might use a loan based on income. Others only lend for specific reasons. As a result, you’ll save yourself time and effort if you find a way to submit your application to multiple lenders simultaneously.
This is especially important since all lenders offer a limited number of products with varying terms. Some may suit you, while others may not.
For instance, loan terms can range from weeks to years. Interest rates can vary greatly too. Typically, lenders reserve the lowest rates for those with good or excellent credit. Nonetheless, it is possible to get a decent rate if you have fair or poor credit. However, you need to apply through multiple lenders to secure the best possible deal.
Luckily, this can occur easily today. You don’t need to scour the internet for lenders that offer a loan based on income. You can apply through one company that acts as a broker for multiple lenders. There’s no obligation to use any of the lenders if you’re pre-approved, but it certainly makes like simpler.
Fill out one application form and provide whatever income verification information the company requires. They automatically align you with appropriate alternative income verification loans. You don’t have to worry about income requirements for a loan. It’s already done for you. There’s no wasting time filling out numerous application forms either.
Compare Alternative Income Verification Loans
Apply once and automatically see what lenders have to offer you. The process does not affect your credit scores, so there’s no risk either. If you’re pre-approved through multiple lenders, it’s easy to compare what each is offering you so you can choose the best.
Check important factors such as the annual percentage rate, fees and penalties, repayment time, borrowing limit, and funding time. Compare carefully and secure suitable terms and a comfortable repayment window.
Luckily, if you have an excellent credit score, some lenders may even approve you for a loan without a current income source. It’s fast and easy and the best way to measure what the market has available.
Other Options When You Have an Alternative Income Source
Unfortunately, some applicants may not be pre-approved, even when they apply with multiple lenders. However, this doesn’t mean they’re out of luck. Income requirements for a loan can vary greatly. Here are a few additional options available.
Consider a Secured Loan
A secured loan is one that is backed by an asset. If you can’t qualify for a loan based on income, you can probably get one if you use collateral. The drawback is that you could potentially lose that asset if you default on your loan. However, that’s not even a consideration when you handle your loan well.
Items that a lender may consider as collateral include:
- Car, truck, motorcycle, boat, or recreational vehicle
- Stocks and bonds
- Retirement account
- Jewelry
- Collections
- Artwork
The lender may require an appraisal of physical items and they may keep them until the loan is repaid. For items such as vehicles, the lender will likely place a lien against the title.
Use a Co-Signer
When you apply through multiple lenders, some may suggest you could qualify with a co-signer. This is often the case when you don’t earn enough for low income loans.
Even if this isn’t your preferred way to borrow, it may help you qualify for a lower interest rate.
Apply Through FlexMoney’s Extensive Lender Network
FlexMoney is your best option if you have an alternative income source and want to improve your odds of approval.
Our huge network of lenders offers a variety of online loans. Apply once and we’ll instantly review your information. You could qualify for anything from a quick cash loan to a personalized installment loan with regular payments. Our process curates offerings to precisely align with your unique financial needs. It’s simple, fast, and easy.
Get pre-approved for loans of between $200 and $35,000 through one of FlexMoney USA’s online loan lenders. The benefits of pre-approval make it well worth it. Loans can be used for almost any purpose including an unexpected car or home repair, emergency expenses, moving costs, medical bills, and more.
Don’t wait. Apply today and connect with the best possible alternative income source loan available to you.