Loans for people on disability

Loans for people on disability (SSI/SSDI) are available even if you have a limited income or less-than-stellar credit. You may need a loan to cover everyday living expenses while waiting for approval of your government disability benefits or to fund special equipment or home modifications. While short-term installment loans are the easiest to qualify for, you’ll get a better rate with a personal loan from your bank, credit union or online lender.

Here, we explore several loan options, plus other ways to access cash for short-term needs. However, if you’re in an emergency, you may qualify for emergency advance payments from SSI.

Qualification for emergency advance payments

Before you take out a loan, you’ll want to check if you qualify for emergency advance payments from SSI. Whether you qualify depends on your situation. Two qualifications include:

• Due SSI benefits that are either delayed or not received
• Facing a financial emergency, such as not having enough money for food or shelter.

The maximum amount you can receive if approved is the SSI federal benefit rate, the total amount of benefits that are due to you or the amount you’re requesting for the financial emergency. The amount you receive in advance payments is subtracted from your monthly benefits in up to six monthly installments once approved for SSI.

What is a disability loan?

While there’s no actual definition of a disability loan, people on disability benefits may need a loan for any or all of the following needs:

• To pay for extra expenses while living on SSI/SSDI benefits.
• To pay for special equipment, like wheelchairs or mobility devices.
• To pay for living expenses before SSI/SSDI benefits are approved.
• To pay for medical expenses.

Types of loans for people on disability

People who receive disability payments can access personal loans, short-term installment loans, cash apps and other types of short-term funding. Here are some of the best loan options if you receive disability payments:

• Personal loans. Online lenders that cater to bad and fair credit borrowers are a good place to look for a loan if you’re on disability. They often don’t have specific income or credit score requirements to qualify, making it easier to get funds compared to a bank or credit union. And they’re quick, too: Many disperse funds in one to three days after approval.
• Cash apps. Cash apps like Dave, Brigit and Vola let you access small amounts of cash — anywhere from $20 to $250 — for things like groceries and gas. As long as you can show regular income from direct deposits, you may qualify for advances up to $250 every month.
• Payday alternative loans. Some federal credit unions offer payday alternative loans (PALs) up to $1,000 with APRs capped at 28%. You must be a credit union member for at least a month to qualify, however — so you may not get your funds right away.
• Credit card cash advances. This may be an option if you already have a credit card and haven’t borrowed up to your credit limit. Credit card cash advances typically have lower rates than short-term installment loans — not including additional fees.
• Home equity loans. Are you a homeowner? You may be able to borrow against your home’s equity through a home equity loan or line of credit. This is a secured loan — meaning you use your house as collateral — but it may be easier to qualify than an unsecured personal loan.
• Short-term installment loans. If you have very poor credit or can’t qualify for a personal loan because of your limited income, you may want to consider a short-term installment loan. However, APRs on these loans can exceed 600%, making them best for one-time emergencies only.
• Other alternatives. These may include borrowing from family or friends or joining a lending circle. While more unconventional, here are 11 alternatives to access cash if you want to consider other options besides taking out a loan.

With SSI benefits capped at $914 monthly for individuals in 2022, you might think short-term installment loans from a payday lender are your only option. But with sky-high interest rates, it’s better to look at other options like personal loans, cash apps and credit card advances first.

Keep in mind: If you’re applying for a personal loan, check to make sure you’re eligible before applying — as every hard credit pull can ding your credit score by a few points.

Eligibility requirements for a disability loan

Since the passage of The Equal Credit Opportunity Act (ECOA) in 1974, lenders can’t discriminate against you for having a disability. But your credit score and income will still need to meet the lender’s requirements:

• Income. You must show that you have some type of income being deposited into your bank account regularly.
• Credit score. Ideally, you need a credit score of at least 580, but some lenders — like installment lenders and cash apps — have no credit score requirement.
• Debt-to-income ratio. Most personal loan lenders want a DTI of 43% or less, although installment loan lenders probably won’t check this.

If you don’t make enough in SSI or disability benefits to cover the amount you want to borrow, you may not be approved for some types of loans. But remember — discrimination based on disability is illegal. However, this doesn’t mean you’re guaranteed approval.

Do loans impact my disability benefits?

Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) have rules on how they treat loans. In general, loan proceeds from a commercial lender are not considered income because of the obligation to repay.

But the caveat is that you need to spend the entire loan in the same month as you receive it. Otherwise, you could lose your benefits for that month if the loan funds push your individual asset limit over $2,000.

When taking out any loan, contact your case manager for information on how these rules may affect your benefits.

How to get a personal loan on disability

If you’re receiving disability benefits, applying for a personal loan is the same as for anyone else.

1. Compare lenders. Start your search by comparing lenders, including online lenders and your local bank or credit union. Do a prequalification to see if you qualify for a loan before applying and doing a hard credit check.
2. Apply for a loan. Once you’ve found a loan you prequalify for and are likely to get, move ahead by filling out an application. You’ll need to provide your personal and income information, as well as any required documentation.
3. Wait for loan approval. After submitting your application and sending or uploading the required documents, the lender will confirm your information and provide you with a decision. Ask the lender how long the decision may take.
4. Receive your funds. If approved for your loan, the lender disburses your funds to your bank account or sends you a check — typically between one to five business days.
5. Repay the loan. Depending on the lender, you may be able to set up autopay so you don’t miss any payments. You may also qualify for a rate discount by doing so.

How to increase your chances of approval

If you’re finding it challenging to get approved for a personal loan, these tips may help you:

• Get a cosigner. Some lenders let you apply for a personal loan with a cosigner, which can increase your chances of approval. However, your cosigner will be on the hook for your payments if you can’t make them.
• Secure the loan. Some short-term installment lenders offer “title loans” that use your car as collateral. While these types of loans are expensive, they can increase your chances of approval since there’s less risk to the lender. But you could lose your car if you don’t pay it back.

Loans for people on disability with bad credit

If you have bad credit, your best options for finding a loan are:

• Online personal loan lenders that cater to bad and fair credit borrowers.
• Cash apps like Dave, Brigit and Vola.
• Short-term installment lenders and title loan lenders.

Can I get a loan while waiting for my SSI benefits?

You may be able to receive a loan through SSI’s presumptive disability program while you’re waiting for approval on your SSI benefits. The loan amount is up to one month’s benefits, but you must be under extreme hardship — such as having no shelter or food — to qualify.

If you qualify, you may be better off getting a personal loan from an online lender that caters to bad and fair credit borrowers like OneMain Financial, Freedom Plus, Avant, OppLoans, Oportun and others. Or use a cash app to bridge the gap.

Alternative options for extra funds

You’re not limited to borrowing when you’re on disability or receive SSI. These organizations offer resources that can help supplement your income from a variety of angles.

• Housing assistance. There are a variety of housing resources for people with disabilities through the usa.gov website.
• Food assistance. If you receive disability benefits, you may also qualify for food assistance through a program like SNAP.
• Health and Human Services (HHS) grants. While these grants are given to community organizations rather than individuals, this is a good place to find local HHS-funded programs that could help you.
• FinAid. Find a list of scholarships and grant opportunities for students with disabilities who need help paying for college.
• ABLE savings accounts. These allow people with disabilities to save and invest money without losing eligibility for SSI or SSDI.
• 221.org. United Way offers free, anonymous help from people in your community. Just dial 211 or visit 211.org.

Bottom line

Disability benefits don’t disqualify you from accessing the cash you need. But if you get a loan, be sure to spend the funds in the month you receive them so you don’t go over your SSI/SSDI asset limit.