When you're living on a fixed income from SSI or SSDI, unexpected expenses — a car repair, a medical bill, a broken appliance — can throw your entire budget off track. You might be wondering whether it's even possible to get a personal loan when your only income comes from disability benefits. The short answer is yes, it's possible. But there are important things to know before you borrow, especially if you receive SSI.
In this article, we'll cover:
- Whether lenders will approve a loan based on disability income
- Types of loans available to people on SSI and SSDI
- Loans specifically for seniors on Social Security
- How taking out a loan can affect your SSI resource limit
- Predatory lending traps to avoid on a fixed income
- Alternatives to loans for covering unexpected expenses
Can You Get Approved for a Loan on Disability Income?
Yes — disability benefits count as income for most lenders. Both SSI and SSDI payments are considered regular, verifiable income. When you apply for a loan, you'll typically need to provide your Social Security award letter or bank statements showing your benefit deposits to prove your income.
That said, the amount you can borrow will be limited by your income level. A lender evaluating someone with $994 per month in SSI or $1,630 in SSDI will approve a much smaller loan than they would for someone earning $5,000 per month. Loan amounts for people on disability income typically range from a few hundred dollars to a few thousand, depending on the lender and your overall financial picture.
Your credit score also plays a major role. If your credit history is strong, you'll have access to better interest rates and terms. If your credit is poor or you have limited credit history, your options narrow — but they don't disappear entirely. Credit unions, in particular, tend to be more flexible than large banks when it comes to working with borrowers on fixed incomes.
Types of Loans to Consider
Personal loans from credit unions are often the best option for people on disability. Credit unions are nonprofit organizations that typically offer lower interest rates and more flexible qualification requirements than commercial banks. Many credit unions also offer small-dollar loan programs specifically designed for members with low incomes.
Secured loans are another option if you have an asset to use as collateral, such as a car. Because the lender has the security of your collateral, interest rates on secured loans tend to be lower. However, you risk losing the asset if you can't make payments.
For seniors on Social Security (whether disability or retirement), some lenders offer pension-based loans or have special programs for borrowers with fixed incomes. These aren't always well-advertised, so it's worth asking specifically whether a lender has programs for Social Security recipients.
If you own your home, a home equity loan or line of credit might be an option for larger expenses. Interest rates are typically lower than personal loans, and the interest may be tax-deductible. However, you're putting your home at risk, so this option requires careful consideration.
How a Loan Can Affect Your SSI Benefits
This is where things get complicated. If you receive SSDI, borrowing money generally has no effect on your benefits. SSDI doesn't have resource limits, so having a loan deposit in your bank account won't cause any issues.
If you receive SSI, you need to be much more careful. SSI has a $2,000 resource limit ($3,000 for couples), and loan proceeds deposited into your bank account could push you over that threshold. Here's the nuance: the Social Security Administration generally considers loan proceeds as a non-countable resource as long as you can prove the money is a loan that must be repaid. But you need to be able to document this clearly — having a formal loan agreement is essential.
The safest approach is to use loan proceeds quickly for their intended purpose (paying a bill, making a repair) rather than letting them sit in your bank account. If you receive a $2,000 loan and your bank balance was already $1,500, that $3,500 total could trigger a compliance issue if SSA reviews your resources. Spending the loan proceeds promptly minimizes this risk.
Predatory Lending Traps to Avoid
People on fixed incomes are disproportionately targeted by predatory lenders. Payday loans are among the worst offenders — they charge annual percentage rates (APRs) that can exceed 400% and trap borrowers in a cycle of debt. A $300 payday loan might cost you $345 to repay in two weeks, and if you can't pay it back on time, the fees multiply.
Title loans, which use your car as collateral, are similarly dangerous. While they're easy to qualify for, the interest rates are extreme and you can lose your vehicle if you fall behind. For someone on disability who depends on their car for medical appointments and daily tasks, this risk is simply too high.
Online installment loans from unfamiliar companies can also carry extremely high interest rates. Always check the APR (not just the monthly payment) and read the fine print. If a lender doesn't clearly disclose the APR and total cost of the loan, that's a red flag.
As a general rule, never borrow from a lender who doesn't check your ability to repay, who pressures you to borrow more than you need, or who makes the process feel urgent. Legitimate lenders give you time to review terms and make informed decisions.
Alternatives to Loans
Before borrowing, consider whether there are other options available to you. Many utility companies offer payment plans for overdue bills. Medical providers frequently offer interest-free payment plans or may reduce bills for patients with low incomes. Nonprofits like the Salvation Army, Catholic Charities, and United Way provide emergency financial assistance in many communities.
Your state may also have emergency assistance programs for people on disability. Contact your local 211 helpline to find out what's available. And if you're dealing with a one-time expense, local churches, community organizations, and disability advocacy groups sometimes offer small grants.
Managing unexpected expenses on a fixed income is hard enough without the added stress of tracking your resources. Purple's checking account helps SSI and SSDI recipients monitor their bank balance against resource limits, making it easier to handle life's curveballs without putting your benefits at risk.