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Loans For People On Disability: What They Are, How To Get One And Alternatives

Miranda Crace6-minute read
UPDATED: December 19, 2023

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According to the Centers for Disease Control and Prevention (CDC), one in four American adults has some sort of disability. A significant portion of this population – one in four people between the age of 18 and 44 – has an unmet health care need because of cost. If you or a loved one is disabled, you may wonder what options are available to help cover living and medical expenses. A personal loan may be a viable solution for people trying to cover the cost of their disability.

What Is A Disability Loan?

A disability loan isn’t a specific type of loan, but it’s a personal loan used to cover various costs. For those who are disabled, a personal loan can be helpful in situations that require:

  • Covering costs before receiving disability benefits: A personal loan can pay for living expenses before you’re approved for disability payments. These living expenses may include groceries and/or housing.
  • Covering costs not covered by insurance: You could use a personal loan to make a down payment on equipment like a wheelchair lift. A personal loan can also help cover costs like custodial care.
  • Covering other personal costs: If you’re granted disability benefits, you may be able to use a personal loan to help pay for personal expenses the disability benefits don’t cover. These costs may include the cost of home improvements to create a more accessible living space.

Lenders tend to offer personal loans ranging from $1,000 to $50,000. In rare cases, lenders may offer loans up to $100,000.

Types Of Disability Loans

Secured and unsecured loans are two common types of personal loans that can serve as disability loans:

  • With a secured loan, a borrower accesses funds by offering up collateral like a savings account. If you default on the loan, the lender can take ownership of the collateral to recoup their losses.
  • An unsecured loan, on the other hand, doesn’t require collateral. This kind of loan presents a higher risk for lenders, so they may only offer an unsecured loan to the most creditworthy borrowers. If you have poor credit or limited income, you may not have access to unsecured loan options.

Some special loans for people on disability are available for specific uses. For example, disabled veterans may have access to exclusive loan programs. One of these loans is a VA home loan, which can enable veterans to become homeowners. Some lenders also offer special auto loans to help with the purchase of a vehicle that has certain accessibility features. Beware of payday lenders who disguise payday loans as “disability loans.”

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Who Can Get A Disability Loan?

The Social Security Administration (SSA) determines who qualifies for government assistance programs. The SSA also decides who receives disability benefits like Social Security Disability Insurance (SSDI).

However, to be approved for a disability loan, you must meet a lender’s requirements for a personal loan. Personal loan eligibility largely depends on your financial situation. Lenders may perform credit checks and look at your credit history. You generally need a credit score that’s at least in the low 600s to take out a personal loan.

Loans For People On Disability With Bad Credit

You may be able to get a personal loan even if you’re in less than good financial standing. Some lenders offer loans with higher interest rates or in smaller amounts to borrowers with bad credit. If you don’t qualify on your own, a lender may allow you to have a co-signer on your loan.

Pros And Cons Of Disability Loans

The pros and cons of getting a disability loan are similar to the pros and cons of taking out a personal loan.

Pros

Cons

You can use these funds to cover living costs while you wait to get approved for disability benefits.

Your debt-to-income ratio will increase if you take on more debt.

Funds don’t count as income or reduce your Supplemental Security Income (SSI) benefit.

If you don’t spend the funds in the month you borrowed them, they count toward the next month’s SSI resource limit.

Fixed monthly payments and repayment terms simplify budgeting for repayment.

You may incur origination fees, prepayment penalties and late payment fees.

You typically gain quick access to funds, sometimes within 1 – 7 business days after applying.

If you have bad credit, low income or no income, getting loan approval can be challenging.

You can build and improve your credit by making regular, on-time payments.

Late and missed payments can damage your credit.

Multiple lenders and loan options are available to choose from, possibly allowing you to secure ideal loan terms.

Lenders may only offer certain options, like unsecured loans, if you have good credit.

You may be eligible for a secured loan if you don’t qualify for an unsecured loan.

If you put up an asset as collateral, you risk losing it if you default on your loan.

It’s wise to reflect on your financial situation and to consult a financial professional as you weigh the pros and cons of a disability loan.

How To Get A Disability Loan

Since a disability loan is a personal loan, the application process for a disability loan tends to mirror the application process for a more traditional personal loan. The steps to getting a personal loan are typically as follows:

1. Determine the loan amount you need.

2. Find the lender offering the best loan terms for your situation.

3. Submit a loan application.

4. Wait for loan approval.

5. Receive funds and start repaying the loan.

Each financial institution has an application and approval process that’s uniquely its own. Check with your lender to learn more about specific requirements and procedures.

Disability Loan Alternatives

If you don’t qualify for a personal loan or you want to explore other options, you’re in luck. Disability loans aren’t the only viable means of financial assistance for those who have a disability and are in need of funding.

Consider the disability loan alternatives described in the sections below to find one that might suit your situation.

Expedited Supplemental Security Income Payment

Under four circumstances, the Social Security Administration may offer expedited payment of SSI benefits. According to the SSA, these four situations are:

  • Presumptive disability (PD) or presumptive blindness (PB) payment
  • Emergency advance payment
  • Immediate payment
  • Expedited reinstatement cases

Visit the SSA website for more information on each of these cases.

Government Assistance

Aside from disability benefits, the federal government offers many other benefit programs. Qualifying Americans can get help paying for essentials like food, housing and utilities.

Visit USA.gov to learn about these programs and their eligibility requirements.

Cash Advance

A cash advance is a type of short-term loan you can use your credit card to get if your card company allows for it. You can borrow funds, up to a certain amount of your credit limit, and repay them later. A cash advance is like buying money from your credit card instead of using your card to make a purchase. You receive funds instantly, like you would from an ATM or bank withdrawal.

However, a cash advance can come with fees and a high annual percentage rate (APR), so it’s a potentially expensive option.

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Disability Loan FAQs

Check out our answers to some common questions people ask about disability loans.

Can I get a loan while on disability? 

Yes, you can get a loan while on disability. Loans aren’t considered an income source. For this reason, getting a loan won’t affect your eligibility for disability benefits.

However, it can affect how much you receive per month. Funds you don’t spend in the month you borrow them count toward the next month’s SSI resource limit.

Where can I get a loan on disability?

You can get a loan on disability anywhere that offers personal loans as long you meet the lender’s loan qualifications. Numerous banks, credit unions and other lenders offer personal loans.

If you have limited mobility, you can apply for a loan from the comfort of your home by using an online lender. Some brick-and-mortar lenders also offer the option to apply for a personal loan online or in person.

Final Thoughts

A personal loan can offer people with a disability quick access to financial assistance. However, it’s best to avoid taking on more debt if doing so is unnecessary. If a personal loan seems like your best option, make time to compare it to other options. Also, be sure to have a repayment plan ready so you can avoid falling behind on payments.

If a personal loan seems like the right choice for you, apply online today with Rocket LoansSM.

Miranda Crace

Miranda Crace is a Senior Section Editor for the Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate, and personal loans for over 10 years.