Getting a personal loan while on disability is possible, but there are important things to know—especially if you receive SSI. Here's what you need to understand before borrowing.
In this article, we'll cover:
- Can you qualify for a loan on disability?
- How loans affect SSI benefits
- How loans affect SSDI benefits
- Best loan options for disability recipients
- Alternatives to personal loans
1. Can You Qualify for a Loan on Disability?
Yes, you can qualify for personal loans while receiving disability benefits.
Disability income counts:
- Lenders can count SSI, SSDI, and VA benefits as income
- Many require benefits to continue for at least 3 more years
- You'll need to document your income
What lenders look at:
- Your income (including benefits)
- Credit score
- Debt-to-income ratio
- Employment history (if any)
Challenges you may face:
- Limited income can mean smaller loan amounts
- Poor credit history may affect rates
- Some lenders don't understand disability income
2. How Loans Affect SSI Benefits
The good news:
- Loan proceeds are NOT counted as income
- Getting a loan doesn't reduce your SSI payment
The catch—resource limits:
- Money sitting in your account counts as a resource
- If the loan pushes you over $2,000, benefits could be suspended
- You must spend the money quickly
Example:
- You receive a $3,000 loan
- That money goes into your bank account
- On the first of the month, you have $3,500 total
- You're over the $2,000 limit—SSI could be affected
Important: If you get a loan while on SSI, spend the money within the month to stay under the resource limit.
3. How Loans Affect SSDI Benefits
SSDI has no resource limits, so:
- Loan proceeds don't affect your benefits
- Money can sit in your account without penalty
- No timing concerns about spending
The only consideration is whether you can afford the monthly payments on your fixed income.
4. Best Loan Options for Disability Recipients
Credit unions:
- Often more flexible than banks
- May have loans designed for low-income borrowers
- Lower rates than payday lenders
Personal loans from banks:
- Fixed rates and terms
- Predictable monthly payments
- Requires decent credit
Secured loans:
- Use collateral (like a car)
- May qualify with lower credit scores
- Risk losing collateral if you can't pay
Avoid these:
- Payday loans (extremely high interest)
- Title loans (can lose your car)
- Predatory lenders targeting disability recipients
5. Alternatives to Personal Loans
Before taking a loan, consider alternatives:
Emergency assistance programs:
- LIHEAP for utility bills
- Local community assistance
- Nonprofit emergency funds
- Church and charitable organizations
Negotiate with creditors:
- Ask for payment plans
- Request hardship programs
- Explain your situation
ABLE accounts:
- If you have savings in ABLE, you may be able to use it
- No need to borrow if you have funds available
Benefits counseling:
- Make sure you're receiving all benefits you qualify for
- A benefits counselor can help identify resources
Government programs:
- SNAP for food
- Medicaid for healthcare
- Housing assistance programs
- Lifeline for phone/internet
Family and friends:
- May offer better terms than lenders
- Put any agreement in writing
- Treat it as seriously as a bank loan
Important: Be very careful with loans on a fixed income. The monthly payments can strain your budget significantly.
How Purple Helps
- Track your balance to stay under $2,000
- Alerts when approaching limits
- See when loan deposits arrive
- Monitor your spending