Personal Loans for People on Disability Benefits: Bad Credit

Personal loan approvals for people relying on disability benefits hinge on the regular government check rather than proof of employment. Lenders love the reliability baked into these publicly-funded programs!

However, requesting a small principal amount is the most critical factor.

First, individuals with low fixed incomes do not qualify to borrow vast sums of money.

Second, many disabled people have bad credit because their income barely covers basic living expenses, yet another reason to keep your request small.  

Finally, SSI recipients have a resource limit of $2,000, so you do not want to over-borrow and risk your eligibility.

Personal Loans for SSDI Recipients

Personal loans for people on Social Security Disability Insurance (SSDI) benefits enable recipients to borrow money against future checks without jeopardizing their eligibility.

Social Security Disability Insurance (SSDI) covers workers that funded the system via FICA taxes payroll deducted by employers. Therefore, they do not have resource limits and can borrow more significant sums.

However, disabled persons with lousy credit scores fare better when they keep the principal amount as small as possible.

Table Of Contents

Fast Response

It’s easy to get a personal loan. (Sponsored Link) Disabled individuals with bad credit can get a fast answer to their request by being prepared to complete the online submission form.

  • Keep the requested amount to the bare minimum needed
  • Indicate the reason you need the money (emergency situation)
  • Select “Benefits” as your income source
  • Have two necessary documents handy  
    • Driver license number
    • Bank account and routing number

You are in control of how quickly the process goes. Give the subprime lenders the information they need to make a fast decision by responding promptly.

Remember that finance companies love the certainty of government-issued Social Security disability checks. The SSDI money keeps coming despite recessions, depressions, pandemics, earthquakes, hurricanes, and other acts of God.

Unsecured Loans

Personal loans are unsecured contracts, which means that you do not have to pledge collateral such as your house or car. Unsecured contracts are ideal for disabled individuals with bad credit history because of what might happen if you default.

Should you default on an unsecured loan, the debt collector may file a lawsuit. However, the agency cannot employ its most potent weapon; Social Security Disability checks are exempt from wage garnishment.

Still, keep your unsecured loan request small to avoid landing in court. A judgment could entail a lien against your house or car.

Installment Loans

Personal loans are installment contracts, which means that you repay the obligation with fixed monthly payments over a set period lasting up to five years.

However, disabled persons with bad credit may not qualify for the most extended terms. Expect to repay the obligation in three or six installments rather than twelve, twenty-four, or sixty.

The average SSDI check is about $1,200, which barely covers subsistence living expenses. Avoid a high debt-to-income ratio by keeping your installment loan request small. 

Personal Loans for SSI Recipients

Personal loans for Supplemental Security Income (SSI) recipients need to be very small to avoid triggering the countable resource limitations.

Supplemental Security Income (SSI) addresses the needs of adults and children who have limited earnings and resources. Because many recipients never paid FICA taxes, you cannot have more than $2,000 in the bank at any time without risking eligibility.

Therefore, make sure to spend all proceeds right away! A lousy credit history will only get worse if your checks stop arriving.

Cash Advance

Payday loans work like a cash advance against your next SSI payment. In other words, you get your money sooner. Perhaps it arrives in 24 to 48 hours instead of up to 30 days later.

However, cash advances are an expensive and dangerous way to borrow money if you rollover the balance too often. A rollover means you fail to repay the entire balance immediately after your next scheduled SSI check.

For example, say you take out a $200 cash advance and pay an origination fee of $30 (15% of the original principal). The lender gives you $170, and you owe $200 back when your SSI check arrives no more than thirty days later.

  • If you pay the total of $200 back at that time, the transaction costs you only $30 – which could be more affordable than a rental eviction, banking overdraft charges, or legal fees.
  • If you rollover the balance, you pay an additional $30 origination fee, and things begin to spiral downwards because the same thing might happen again after another thirty days, and so on.

Without Bank Account

SSI recipients can take out a payday loan (cash advance) without a bank account by using their Direct Express debit card. The application process is nearly identical, except that you must provide the card number and PIN rather than a routing and account number.

If approved, the lender will transfer funds quickly to your debit card, which you can use to address your emergency need without a banking account.

Of course, you must pay the entire balance shortly after receiving your next SSI payment to avoid rollover fees and the debt snowball, which could ensue.

Frequently Asked Questions

Scan this list of frequently asked questions to understand better personal loans for people on Social Security Disability and Supplemental Security Income benefits.

Are There Special Loans for the Disabled?

No – there are not special personal loans for the disabled. However, people receiving government benefits can borrow small sums from sub-prime lenders and pay it back out of future disability checks.

What’s the Best Loan for People on SSI?

The best loan for people on SSI has affordable payments and does not jeopardize eligibility by putting them over the $2,000 resource limit.

How can I get a Loan with Bad Credit and Disability?

You can get a personal loan even if you have terrible credit and rely on disability benefits for support. The key is to work through sub-prime lenders, keep the amount small, and have your driver’s license and checkbook handy.