What Income Do You Need For A Personal Loan?

To be approved for a personal loan in NZ you’ll need at least one stream of reliable income to cover repayments. So, what income do you need for a personal loan? Canstar explains.

The income requirements for a personal loan can vary depending on the lender, the loan amount, your credit score, and other factors. Generally, lenders will assess your income to determine whether you qualify for a personal loan and how much you can borrow. Here are some key factors that lenders consider when evaluating your income for a personal loan:

Minimum income threshold

Lenders typically have a minimum income requirement to qualify for a personal loan. A minimum income threshold refers to the minimum level of income that a borrower is required to have in order to be eligible for a loan from a particular lender. For example, some lenders may require a minimum annual income of $45,000, while others may require $90,000 or more.

This threshold varies from one lender to another and can also depend on the type of loan, the loan amount, the borrower’s creditworthiness, and other factors. If a borrower’s income falls below this threshold, they may not qualify for the loan from that specific lender, regardless of other factors such as credit score and employment history.

Stable income

Lenders want to see a stable source of income. This could be from employment, self-employment, retirement benefits, or other sources. Consistent employment and income history can improve your chances of approval.

Lenders may verify your employment to ensure that you have a steady income. They may request pay stubs, tax returns, or other documents as proof of income.

Debt-to-income ratio

Currently, there is no set framework around debt-to-income ratios in New Zealand. But, the Reserve Bank has been mulling over the possibility of introducing one. In saying that, lenders are able to use DTIs of their own, should they wish to. In recent years, both BNZ and ASB have used debt-to-income ratios to guide their lending (at around six to seven times income). However, to what extent DTIs are still in use is unclear.

→Related article: What Does Debt-to-Income Ratio Mean?

Joint personal loan

Joint personal loans can be beneficial when you need to borrow a large amount of money, or when one co-borrower has a stronger credit history or income. However, they also come with shared financial responsibility and potential risks, so it’s crucial to carefully consider the arrangement and ensure that all parties are on the same page before applying for a joint personal loan. If one borrower can’t or won’t repay a joint overdraft or personal loan, the other person will be responsible for repayments. This is called ‘jointly and severally liable’.

Compare personal loan providers with Canstar!

It’s essential to shop around and compare loan offers from different lenders, as their income requirements and lending criteria can vary. Additionally, meeting the income requirements is just one aspect of loan approval. Lenders also consider your creditworthiness, employment history, and other financial factors when making a lending decision.

About the author of this page

This report was written by Canstar Content Producer, Caitlin Bingham. Caitlin is an experienced writer whose passion for creativity led her to study communication and journalism. She began her career freelancing as a content writer, before joining the Canstar team.

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