Will getting a loan affect disability benefits?


There are many times when a good solution to a financial need is to get a loan. However, it is important to know how getting a loan will affect other sources of income that you may have. For example, if you are receiving disability benefits, you should understand how getting a loan will affect your benefits.

Can You Actually Get a Loan on Disability?

People on disability may be eligible to take out a loan, but there are some requirements. For instance, you need a minimum credit score, and the maximum amount of debt you can have varies depending on your income. How long it takes to get a loan varies — typically, it shouldn’t take more than a few days for most loans.

What does a loan have to do with my SSI benefits? 

According to SSA, a loan, as long as it is valid, will not affect your SSI benefit. However, if you spend any money that you borrowed in the same month, then it may count towards your SSI resource limit the next month. A loan to another person that they owe you is considered a countable resource and may affect eligibility for SSI.

What Are Social Security Disability Loans?

A disability loan is a personal loan you can take out to help with your most basic needs if you are disabled and unable to work. These loans are only used for a short amount of time while the SSA processes your application — they shouldn’t be an alternative to benefits.

Which type of disability loan should you get?

There are many types of loans that can be used for different reasons, but the type that you get will depend on why you need it. For example: 

  • Personal Loan is right decision:  This kind of loan is generally used to pay off medical bills and finance an engagement ring. Most lenders require a minimum credit score to qualify for an unsecured personal loan. 
  • Mortgage Loan: This type of loan is usually taken out for purchasing a home. It tends to take longer than other loans and requires collateral. Medical Loans: These loans can be used to cover medical expenses to get you back on your feet. 
  • Auto Loans: These loans are typically used to buy cars and finance future payments over a short period of time. 
  • Payday Lenders: This type of lender is a short-term, high-interest loan. Payday loan for bad credit is most often taken out to cover sudden expenses like car repairs or medical bills before they pile up. Because Payday Loans are short-term, they tend to have high interest rates, which make them hard to repay in full by the due date. When that happens, the borrower is forced to renew their loan with more fees attached and it becomes increasingly difficult to pay off the debt. If possible, try to find a more sustainable form of financing before going for a payday loan.

How Cash Borrowed Affects SSI Eligibility 

If you borrow cash, or if you loan the money to someone else, the way the Supplemental Security Income (SSI) program calculates your assets and income will be impacted and might affect your eligibility for SSI. If you’re single, you can have up to $2,000 in assets and still qualify for SSI. The amount of money you can make each month and still get SSI often changes from year to year and state to state.

Are Cash Loans Considered as Asset for Disability?

In general, when somebody borrows money from somebody else, the Social Security Administration (SSA) will consider it either income or an asset. That means that your eligibility for SSI or your SSI benefits can be affected. However, sometimes the SSA can decide that the value of the loan doesn’t matter. This is a complicated determination, so it’s important to know what the SSA considers an asset before borrowing or lending any money.

Here are some of the steps the SSA will look at when determining a bona fide loan: 

  • Get a copy of the written agreement with both parties’ signatures; 
  • The SSA will review applicable state laws to determine whether a bona fide loan exists.

Bottom line 

When considering all of your options, if you decide to opt for a disability loan, it is important to have a solid plan in place and the money to pay it back. It’s also important to research and compare different lenders to find the one that offers the most favorable rates and terms for your financial needs.


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