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Income verification documents, which are typically requested when you’re applying to rent a home or apartment, are documents that prove you have a job and are earning an income.

A landlord requests these documents to ensure that you’re earning enough to cover your rent payments each month. The income verification paperwork requested may vary from landlord to landlord, and the documents may also differ, depending on your specific career situation. The landlord is simply doing their due diligence to make sure you can afford the rental.

How to Show Proof of Income to Rent an Apartment

There are a number of ways that prospective renters can show proof of income to a prospective landlord or property management company. The types of documents you need to produce will likely depend on the specific request from the landlord.

Generally, there are a few standard income verification documents that landlords and property managers are looking for:

•  Pay stubs

•  Tax returns or W2 forms

•  Bank statements

•  A letter from your employer

Typically, a landlord will request two forms of income verification. Often, your pay stubs and tax forms will suffice as proof of income. But in some cases, you may need to submit several months’ worth of bank statements. You might even need to ask your employer to write you a letter to assure the landlord that you have a job and do have income.

How to Show Proof of Income if You’re Self-Employed

If you’re self-employed, the process can be more complicated. You may need to submit 1099 tax forms or your personal tax returns showing regular and steady income going back a couple of years. Depending on the nature of your self-employment, you may have business tax returns, such as a Schedule C if you own and run a small business, that you can use to verify your income.

You can also use bank statements from your business bank account to show a landlord that you have income. The documents required will likely be similar to those you need when applying for self-employed personal loans. Ask the landlord what will work best for them so you will know exactly what documents you should present.

How to Show Proof of Income for Side Hustles

You may have a side hustle — perhaps you make and sell crafts online, for instance — and that’s similar to owning a small business. And you should be reporting the income you make from your side hustle to the IRS on your tax return. By presenting your tax return to a landlord, you can prove that you’re making side hustle income.

If you’re working for a ridesharing app or food delivery service, the company should be sending you a tax statement with your annual earnings so that you can report them on your tax return. You can always show a copy of that tax statement to a prospective landlord.

Why Proof of Income is Important

Proving your income is important when you rent an apartment — or apply for credit, for that matter — because it shows that you have money coming in every month, and are able to fulfill your financial obligations. In other words, it shows the property owner that you can make your rent payments.

Recommended: What Is The Difference Between Transunion and Equifax?

Understanding Rent-to-Income Ratio

Along with proving your income, you need to make sure that your rent is not eating up too much of your paycheck. That’s where the “rent-to-income ratio” comes into play. It calculates the percentage of your total income that you’re spending on rent.

The general rule of thumb is that you shouldn’t spend more than 30% of your gross monthly income on housing costs. Depending on where you live, those costs may be a higher or lower percentage of your income, but try to aim for around 30%. An online money tracker can help you keep tabs on your spending.

To figure out your rent-to-income ratio, divide your total annual earnings by 12, which gives you your monthly earnings, and multiply that number by 0.3 (or 30%). The result is how much you can afford to spend on rent per month.

Annual earnings ÷ 12 x 0.3 = How much you can afford to pay for rent

For example, let’s say you earn $50,000 a year. Divide that number by 12 and multiply it by 0.3 and you get $1,250. That’s what you should aim to spend on rent each month. Depending on where you live, you may need to spend more, but that figure gives you a ballpark of where you should be in order to have enough money to pay for your other expenses and hopefully, contribute to your savings as well.

How to Best Prepare to Pay Rent

When you are approved by a landlord to rent an apartment, you’ll need to plan and prepare to pay your rent on time and in full every month.

That means having your finances in order. First, you should have a checking account set up. Typically, you’ll pay your landlord by check or through an online portal and either way, you’ll need a bank account in order to do this. You may be surprised to learn that more than 6% of U.S. households (or more than 14 million people) don’t have a bank account. Fortunately, it’s easy to open a bank account if you don’t have one.

Next, make sure that you’re properly budgeting for your rental expenses. You want to make sure that you have enough money in your account to cover the rent when your landlord cashes your check. A budget planner app can help.

There are other expenses that can go along with renting an apartment or home that you may need to pay. Here are a few you should be aware of:

•  Utility bills

•  Renters insurance

•  Parking, maintenance, and fees for amenities such as a gym or pool

Finally, know the terms of your lease. It’s common for rent to go up once a lease expires, which you may discover when you go to re-sign or renegotiate the rent. Unfortunately, renting is not like a fixed-rate mortgage when you have a monthly rate locked in. So don’t be surprised if the costs of staying in your apartment go up after your lease expires.

The Takeaway

Income verification documents offer proof to a landlord or property management company that you have enough money coming in every month to pay the cost of an apartment or home rental. Typically, pay stubs, tax returns, and bank statements are the only forms of documentation you need. However, if you are a small business owner, you may be required to produce additional documents. The good news: Once you are approved to rent, you can start the process of moving in.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Can you rent an apartment with no income?

It is possible to rent an apartment with no income, though it likely will be quite difficult. In this instance, having a high credit score can help, because it shows you have a track record of paying your expenses. A healthy savings account can also be useful to prove you have money in the bank.

Can proof of income for an apartment be faked?

It is possible to fake proof of income for an apartment by using online tools to create fake pay stubs and other documents. This constitutes fraud and is illegal, but it does happen.

Is proof of income different for a student?

Yes, it can be, yes. If a student has no income because they are studying full-time, they may need to get a co-signer like a parent or guarantor in order to secure a lease.

Photo credit: iStock/Anna Kim

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q224-1921062-V1

Claiming unclaimed money from a deceased relative can be fairly straightforward — or more complicated — depending on state inheritance laws and the amount of supporting evidence to back the claim.

When a person dies without a will or other legally binding document outlining the distribution of their financial assets, that money may become “unclaimed” after a designated period of time. Unclaimed money is often turned over to the state where that person lived. However, it is possible for relatives to claim that money through the appropriate channels.

What Happens to Unclaimed Money from Deceased Relatives?

When no direct heir is identified, unclaimed money and assets from a deceased relative go to the state government. How soon the money goes to the state after the person dies will vary according to that state’s inheritance laws.

Once unclaimed money ends up in the hands of the government, the state authority will try to identify any relatives that are entitled to claim the money. Typically, a description of the assets and the name of the deceased are posted to one or several public and searchable websites. Some examples of these websites are:

•  Unclaimed.org

•  MissingMoney.com

•  TreasuryDirect.gov

•  FDIC.gov and NCUA.gov

•  PBGC.gov

•  UnclaimedRetirementBenefits.com

•  ACLI.com

Can You Claim Unclaimed Money From a Deceased Relative?

If you believe you are entitled to an unclaimed financial asset of a deceased relative, you can file a claim with the state government or business that is holding it. If you are specifically named as a beneficiary in the deceased relative’s will, the claim process can be relatively smooth. If not, you may still be able to claim that money but it will require supporting documentation or potentially a decision from a presiding probate court judge to ultimately verify the claim.

Recommended: How Much Does It Cost to Make a Will?

What Types of Financial Assets Can Be Claimed from Deceased Relatives?

Unclaimed money doesn’t necessarily have to be in the form of cash; it can also include other assets of value such as:

•  Real estate

•  Forgotten bank accounts

•  Bonds

•  Stocks

•  Certificates of deposit

•  Annuities

•  Royalties

•  401(k)s and other retirement plans

•  Vehicles and other physical assets

Recommended: Unclaimed Money from Scholarships and Grants

What to Expect From the Unclaimed Money Process

If you’re planning to claim unclaimed money, the process will vary depending on the state you’re filing in and the asset in question. In some cases, you can file a claim online, provide proof of identity and any documented proof of ownership, and wait for your claim to be processed. Once the claim is approved, you receive the money. A budget planner can help you make the most of any unclaimed money you receive and also provide valuable financial insights.

In situations where the deceased did not have a will or an executor for the will, a probate court will typically appoint someone to oversee any ownership claims and asset transfers. If this is the case, you may have to wait longer or provide more documented proof in court before your claim is approved.

Once your claim is approved and you receive the money owed to you, you may be required to pay inheritance tax. Again, this depends on which state the deceased lived in. However, spouses are exempt from paying inheritance tax in every state.

The Takeaway

Claiming unclaimed money from a deceased relative is entirely possible. However, the complexity of the process will ultimately depend on the circumstances and location of the deceased. If you believe you’re entitled to claim unclaimed money from a deceased relative, leveraging an estate planning attorney or a financial advisor can help demystify the process and any specifics about your claim. Bottom line: It’s never too early to start thinking about your own estate planning needs and long-term financial goals.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How do you know if a deceased loved one has left you money?

If a deceased relative has named you as a beneficiary in their will or another legally binding contract, the executor of that document or a probate court will likely reach out to inform you of any unclaimed money you are entitled to. If not, you can still check to see if you are entitled to money by searching one of the public online unclaimed-money databases or by reaching out to the deceased relative’s financial advisor or estate planner.

How do I find assets of a deceased person?

To find the assets of a deceased relative, try looking through their personal property, reach out to relatives and other friends with knowledge of their financial affairs, or inquire with the local probate court or state government agencies.

What happens when you inherit money?

Depending on where you inherit money, you may be required to pay inheritance tax. After that, you are free to do with the money as you please. However, it is often advisable to think hard about how to use that money to support your financial needs or long-term goals.

Photo credit: iStock/mdphoto16

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q224-1921044-V1

A debit memorandum is a notice issued to customers from a bank or a business, informing them of an adjustment being made to their account balance. In all cases, a debit memo means that money will be taken out of an account to cover a fee or an underpayment.

Debit memos occur both in personal banking — like for a bounced check or insufficient funds fees — but are also common in business-to-business (B2B) transactions. They are often to correct an erroneous invoice or respond to changing market prices. Understanding how debit memos work can help you stay on top of your money.

What Is a Debit Memo?

A debit memo is a notice from a financial institution or a business to a customer that there is a forthcoming adjustment (a debit or withdrawal of funds) to their account. You may also hear it referred to as a debit memorandum or debit note.

A debit memo might show up on your bank statement for an atypical fee, like for ordering checks or for overdrafting. Normal checking account debits, like from a swiped debit card or a cashed check, are not classified as debit memos and will not appear on a bank statement as such.

In B2B transactions, a company may issue a debit memo after invoicing if there was something incorrect on the original invoice. Typically, this happens if the customer was undercharged.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

How Does a Debit Memorandum Work?

In banking, if you have incurred a fee, such as an overdraft fee, the bank will add a debit memorandum to your monthly bank statement. If you use a digital banking app, you can often see this debit note in real time — no need to wait for a paper statement in the mail.

Just make sure you’ve turned on account alerts to track deposits, withdrawals, and other important account changes.

Banks cannot just assess fees at random. Federal law requires banks to disclose any fees they might charge for a bank account; before opening a bank account online or in person, ask to see a detailed fee structure. If you don’t think a debit memo on your bank statement is correct, contact customer service to address the issue.

In business, debit memos work a little differently. The company acting as the seller might issue a debit memo after sending an incorrect invoice. Doing so notifies the buying company that their accounts payable will increase to rectify the unpaid amount.

Recommended: How Long Does It Take to Open a Bank Account?

Real-Life Examples of a Debit Memorandum

Here are two real-life examples of bank memos, one for regular consumer checking accounts and one for a B2B transaction.

Banking Scenario

If you write a check to a friend but don’t have enough money in your checking account to cover it, the check will bounce when your friend goes to deposit or cash it. Every time you bounce a check, your bank will likely charge you a fee. Rather than sending you an invoice, they will directly debit the amount from your bank account.

Even if you have no money in your account, you can go into a negative balance. This debit will show up on your bank statement as a debit memo.

Business Scenario

In this example, your company has done construction work for a local business. However, when sending the invoice to the business, you accidentally left off the labor cost and additional materials required for one portion of the project, equivalent to $5,000.

To resolve this problem, you can issue a debit memo to the local business. This signals that you will be recording an increase in your accounts receivable of $5,000. In turn, the local business will then need to increase the amount in its accounts payable by $5,000 to cover the additional fee. To avoid delays or disputes, the debit note should include adequate information to explain the adjustment in the final cost.

Recommended: How to Transfer Money From One Bank to Another

Types of Debit Memos?

Three situations commonly call for debit memos: bank transactions, incremental billing, and internal offset. Here, learn about all three types of debit memos to understand their key differences.

Bank Transactions

As an individual consumer, you will most likely encounter a debit memo as a bank transaction. If you incur a fee through your bank, like for printing checks or an overdraft, the bank will debit your account directly to cover that fee. This will show up on your bank statement as a transaction, labeled as a debit memo or debit note.

Incremental Billing

If you are involved in billing for B2B transactions, you may encounter debit memos. A seller might issue a debit memo to a buyer for several reasons:

•   If there were errors on the original invoice.

•   If the buyer paid upfront, but project costs were higher than expected.

•   If the cost of materials or labor increased during the course of the project.

•   If the scope of the work changed and resulted in higher costs.

Internal Offset

If a customer’s account has a credit balance of insubstantial value, a company can issue a debit memo to clear out the balance. If the balance is large enough to be considered material (i.e., a significant amount of money), the company would typically refund the customer rather than issue a debit memo.

Debit vs. Credit Memorandum: What’s the Difference?

Credit memos are essentially the opposite of debit memos. In banking, credit memos alert customers of an increase in their account balance. In business, a seller might issue a credit balance to alert the buyer that the original invoice was too high, thus reducing the amount the buyer owes.

Notification to Customers

When a bank issues a debit memo, it typically notifies the customer of the debit on the bank statement. Similarly, a credit memo will show up on a customer’s bank statement.

As a customer, you may receive paper or electronic statements. If you bank online, you can typically check your transactions at any time on the app or website. When you receive notification of a debit, you’ll want to take it into account when balancing your bank account.

Invoicing

As a seller issuing a debit memo, you are notifying the buyer that you are increasing the final invoice amount. A credit memo does the opposite: It notifies the buyer that you are reducing the final invoice amount.

Recording the Reduction

In the event of a debit memo, the seller will record an increase in the accounts receivable amount; the buyer must record the larger debit in their accounts payable ledger. For a credit memo, the seller records a decrease in the accounts receivable amount while the buyer records a smaller debit from accounts payable.

Debit: Remit Payment vs. Credit: Future Purchases

To clarify a bit more, debits are amounts owed that must be remitted to settle and account. Credits are money that an individual or business is owed, perhaps reflecting an overpayment, which may be applied to future purchases.

Here’s a summary:

💡 Recommended: Credit vs Debit Memo

Managing a Bank Account

When you open a checking account or savings account, it’s important to understand the fee structure so that you aren’t surprised by a debit memo on your monthly account statement. Ask for a fee structure upon opening a new account, and monitor your statements closely to understand what fees are being assessed.

As best as you can, check your checking account for low balances, and set up alerts for all transactions. It can also be wise to activate fraud alerts to help manage your banking security and protection.

The Takeaway

Debit memorandums alert banking customers that funds will be withdrawn from their account, often to cover fees incurred. This will lower an account balance, so it’s important to be aware of these changes and make sure your account doesn’t go into overdraft.

Looking for the right banking partner? See what SoFi offers.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Do you pay a debit memo?

A debit memo serves as a notification of a debit from your account. The bank will automatically debit your account. In a B2B scenario, a debit memo is a form or document that notifies the buyer that the seller has increased the accounts receivable amount.

Who issues a debit memo?

A bank or credit union may issue a debit memo to a personal or company account for specific fees, including bounced checks, insufficient funds, or printing checks. A business may issue a debit memo to another business to correct an invoice that results in underpayment. A business can also use a debit memorandum internally, to offset a credit balance in a customer account.

Is a debit memo the same as an invoice?

A debit memo is not the same as an invoice. Rather, businesses often issue debit memos as a correction to an initial invoice, typically when they have mistakenly undercharged a customer.

Photo credit: iStock/Vadym Pastukh
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBK-Q224-1929370-V1

The maturity date for an installment loan like a personal loan is the date on which you’ll be finished paying off your loan. It’s important to mark this day on your calendar, not only to celebrate successfully paying back your debt, but also because it can tell you important information like how much you’ll ultimately end up paying in interest.

Here’s a look at how to figure out the maturity date for your personal loan, and other important loan terms you should know.

What Is the Loan Maturity Date?

The term “maturity date” can refer to loans or investments. In investing, it refers to the day on which you’ll receive the money you invested, for example, in a savings bond or certificate of deposit (CD). You’ll get your investment back, plus any remaining interest that’s due to you.

If you’re a borrower, the maturity date of a loan is the day your lender has scheduled for your loaned funds and any interest to be paid off in full. Provided you’ve made regular and timely payments throughout the term of the loan, you’ll have no further obligation to the lender after the maturity date.

If, for whatever reason, you still have a balance after your loan maturity date, you’ll want to talk to your lender and work out a plan to pay off the remainder of your loan.

Recommended: What Is a Personal Loan?

How Does the Loan Maturity Date Work?

Your loan’s maturity date is a part of your initial loan agreement. You can find it on your loan contract. For example, say you take out a $10,000 personal loan on June 1, 2024 with a 36-month term. The loan maturity date will be 36 months later, on June 1, 2027.

It is possible to pay off your loan early before the loan maturity. This can save you money in interest payments. However, be mindful of whether your lender charges prepayment penalties. These penalties can outweigh the advantages of paying off your loan early.

Length of a Personal Loan Maturity Date

A loan term is the amount of time you’ll have to pay it off before you reach the maturity date, usually calculated in months. You can often find personal loans with terms from 12 to 60 months, and some lenders will offer loans with terms of up to seven years or longer.

The longer your term, the longer you’ll be paying interest, which generally makes these longer-term loans more expensive for borrowers. When choosing a loan, you may want to consider one with the shortest term (and closest maturity date) possible, as long as you can comfortably afford the monthly payments.

Calculating Your Loan Maturity Value

A loan’s maturity value is the sum of the principal plus all of the interest you’ve paid on the loan. The maturity value (MV) formula is:

MV = P + I

Where “P” is the principal amount of the loan and “I” is the loan’s annual percentage rate (APR).

For example, say you take out a $10,000 personal loan with a 36-month term and 12% APR. In this case P = 10,000 and I = 12%. You can use a personal loan calculator to determine how much interest you will pay on the loan over the 36-month term, then add that to the principal loan amount. Here, the equation would look like:

MV = $10,000 + $1,957.15
In this case, MV = $11,957.15

What Happens at the Personal Loan Maturity Date?

At the personal loan maturity date, you will make your final loan payment. Provided you have stayed up-to-date with all of your payments, you will have fully paid off all of your loan principal and whatever interest you owe and have no further obligation to your lender.

However, this may not be possible if you’ve fallen on hard financial times. If you think you’ll have trouble making any of your loan payments on time, it’s a good idea to reach out to your lender immediately and see if there’s anything they can do to help. They may allow you to pay at a later date.

Recommended: What Happens If You Default on a Personal Loan?

Other Important Information on the Personal Loan Agreement

In addition to maturity, you’ll find other useful information on your personal loan agreement.

Loan Principal

Your loan principal is the initial amount of money that you borrow, and it is the amount you agree to pay back with interest. So if you take out a $30,000 personal loan, the loan principal is $30,000.

The total amount of interest that you pay will be determined by the principal, as well as the interest rate. When you make a payment each month, part of the total is applied to your interest while the remainder goes to your principal. Typically, as you make more monthly payments, a larger portion of your payment each month will go toward the principal, until your loan is repaid in full on the maturity date.

Recommended: What Is an Installment Loan and How Does It Work?

Loan Interest Rates

The interest rate is the amount that your lender charges you to borrow, and it’s the main way that lenders make money. Most personal loans rates are fixed interest rates, meaning the rate will not change over the life of the loan. The average personal loan interest rate is currently 12.21%. But rates will vary depending on your credit score.

Variable rate loans, on the other hand, carry interest rates that are usually pegged to a market interest rate. As a result, they can change over the life of the loan.

There may also be hybrid situations in which a loan starts with a fixed interest rate for a period of time, after which it switches to a variable rate. If market rates have gone down, this can be a good thing for borrowers. But if they’ve gone up, a variable-rate loan could be more expensive than its fixed-rate counterpart.

Monthly Loan Payments

You’ll be able to find the amount you owe each month on your personal loan agreement. Your loan payment should be the same over the course of your loan unless you have a variable interest rate.

The Takeaway

For an installment loan like a personal loan, the maturity date is the day of the final loan payment. This date is set based on the loan’s repayment period — how long you have to repay the loan, including both principal and interest. A personal loan is typically considered to have short- to medium-term maturity, since terms generally run from a few months to seven years.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What happens if the loan is not paid by the maturity date?

If your loan is not paid by the maturity date, you’ll need to work with your lender to come up with an extended repayment plan. If your last loan payment is late or your loan is in default, you may face penalties and your credit score may be negatively affected.

What is the maturity date on a loan?

The maturity date on a loan is the date by which a borrower has agreed to pay off the loan principal and interest in full. You generally make your final loan payment on the maturity date.

When is the maturity date on a loan?

The maturity date on a loan is the date when your final payment is due. It is based on the term of your loan. If you take out a personal loan on June 1, 2024 and the loan has a 36- month term, for example, the maturity date will be June 1, 2028.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

There are many different types of loans. And when you need money quickly, it can be challenging to assess the pros and cons of different options. It can also be challenging to assess which loans are right for you if you’re still building credit.

Many loans require a credit check, and your credit score may affect the interest rate and terms you are able to qualify for when borrowing a loan. But what if you have no credit or bad credit? There may be other loans available outside of personal loans from banks. Income-based loans, which evaluate your income as a primary deciding factor, may be an option to consider. These loans could give you the cash you need but also have some potential drawbacks. Here is what to know about loans based on income.

How Does a Loan Based on Income Work?

Personal loans can be used to pay for nearly any type of expense. In addition to the flexibility for use of funds, other advantages of personal loans include convenience, lower rates than credit cards (typically), and quick turnaround times. Generally, lenders will evaluate an applicant’s credit history in order to make lending decisions.

Loans based on income, also known as income-based loans, work differently. Instead of focusing on an applicant’s credit score and history, these loans take your income into account. While “income-based loans” and “loans based on income” are terms you may see when researching personal loans, these are primarily marketing terms. The companies who use these may be using income as a method of evaluating loan applications, making them an option for borrowers looking for no credit check loans.

With a loan based on income, the lender may ask for proof of income, such as a W-2, paystub, tax returns, and/or recent bank statements. You’ll also need to share personal information on the loan application, such as your address and social security number. But unlike a traditional personal loan, the evaluation may not include a credit check.

Because the lender isn’t considering credit, the terms of the loan may be different from a traditional personal loan. For example, the loan may have a high interest rate or require collateral. Collateral is when you, as a borrower, put up an item of value to back the loan in case you are unable to pay back the loan. This might be something like your car or even your house.

Whether a loan requires collateral determines whether it is a secured or unsecured loan. Both options may be part of an income-based personal loan.

Recommended: Using Collateral on a Personal Loan

Secured Loan

A secured loan is a loan that requires the borrower to put up collateral and can be an option for borrowers with poor or thin credit. These loans can take several forms:

Pawn loan. A pawnshop loan is where you put an item of value up as collateral, such as jewelry or electronics, in exchange for the loan. In addition to collateral, you’ll also have to pay the loan back with interest. If you are unable to do so, the pawn shop will then own the collateral and may sell it. Pawn loans can also be an option for those looking for no bank account loans.

Title loan. If you own your vehicle, you may be able to take out a loan for the valued amount of your car. In a title loan, you physically keep possession of your car, but the lender can hold the title of your vehicle. Interest rates for this type of loan can be very high — up to an APR equivalent of 300% — and can be risky. After all, if your income depends on your ability to drive to work, losing ownership of your car may mean that your ability to work is in jeopardy, too.

Home equity loan. If you own your home, you can borrow against the value of your home’s equity through different types of loans, including cash-out refinance, a home equity line of credit (HELOC) or a fixed-rate home equity loan. These types of loans can require a relatively lengthy approval process, and may not be appropriate if you need cash quickly, or if you need a relatively small loan.

Unsecured Loan

An unsecured loan does not require collateral. For this reason, this type of loan poses more risk to the lender. If you do not pay back the loan, the process to get back their money can take a long time, involve the legal system, and may be fruitless if you declare bankruptcy.

That’s why lenders may require a more extensive application, including performing a credit check on the potential borrower. If you, as a borrower, know that your credit history isn’t great or you are still building your credit, you may have fewer unsecured personal loan options.

Still, there may be some available. Knowing the pros and cons, reading the fine print, and having a clear plan for how to pay back the loan can be important in assessing which one is the right one for you.

Payday Loans

One type of loan that might be accessible for people with no or bad credit is a payday loan. This is usually a short-term, high-cost loan that is due on your next payday. Typically, payday loans are relatively small (generally under $500) and some states may have a limit as to how much people can borrow.

Payday loans are, like their name, due on your next payday or when you next get income. A payday loan typically has a relatively high interest rate may have fees as well. To ensure your loan is paid back, the lender may ask for a postdated check or money order. One of the problems with a payday loan is that if you can’t repay it on time and have to renew the loan, you can end up falling into the payday loan cycle. This can cause debt to snowball, and cost a lot of money in the long run.

Alternatives to Loans Based on Income

If you need money quickly, you may have some other options available. These could include:

Using a credit card or credit line. If you have access to credit, utilizing a credit card or credit line could help you through a financial rough patch. But because interest rates can be high, having a plan to pay back what you borrow or taking advantage of a card with a low APR can be a good strategy.

Borrowing from friends or family. Sometimes a loan from a friend or family member can be more flexible than borrowing from a lender. It can be a good idea to consider drafting an agreement, even if it’s relatively informal, regarding expectations, any interest agreements, and other conditions.

Selling things. Selling things you no longer need may help you raise cash quickly. Using local online marketplaces can be a quick way to unload things you’re not using and raise money.

Starting a side hustle. While it can take time to onboard onto a new job, applying for part-time jobs could be a potential long-term strategy to access more money. In the short-term, informal jobs such as babysitting, tutoring, or other work could help you raise the cash you need.

💡 Quick Tip: If you’re considering income-based loans, exploring loans online can provide fast access to funds and potentially more flexible qualification criteria.

The Takeaway

Finding yourself in a financial lurch can be scary. But taking the time to weigh pros and cons of options may be helpful in choosing a sustainable path forward. Understanding the benefits and risks of loans based on income can help you assess whether this type of loan makes sense for your current financial circumstances.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

Photo credit: iStock/Khosrork

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.