Single mothers are the stepchild in lending. Banks tend to keep a low profile when lending to single mothers. This is to be found in the financial situation of single parents. You have to cover all costs alone and although support comes from the state and child benefit, the financial situation is always scarce. Most of the time, there is only one income available, so the considerations that banks make when lending to single mothers are not entirely groundless.
Loan for single mothers – the outlook
If a single mother has two young children to look after, she cannot take a full-time job. A small part-time job would be feasible if the children were in kindergarten in the morning. But this is also not always possible because one of the children is often ill and the mother has to stay at home. So there are quite a few mothers who rely entirely on state support. Of course, these are not preferred customers at the bank.
Before banks approve a loan, the creditworthiness is checked. In addition to the income, this is the credit check that is queried and the permanent position. But with a single mother, many of these conditions disappear because she has to take care of her children. It is bitter that these mothers are often on the wall financially and do not know where the clothes and food for their children should come from. If an urgent repair or purchase comes in between, the whole financial situation gets out of hand.
Banks will first check if a single mother loan is needed. Actually, that should be the thought of the single mother. If I absolutely have to have a loan, I cannot do it in any other way. If the financial framework is so tight, single parents should turn to social services instead of the bank if they have a faulty washing machine or stove.
Certainly consumer goods should not be financed through a loan if the economic situation looks so bleak. If it is really important things such as electricity bills or rent arrears, then a loan could be considered. Basically, this will only be a small loan, but it also has to be repaid.
For this reason, high rates must not be estimated, which will make the loan more expensive, since it must then have a long term. All outstanding bills should also be included in the loan amount, not that you then have to pay in other places. The small loan will be around 5,000 dollars.
If the loan for single mothers is refused, the question of a guarantor would be raised. A guarantor could secure the loan and bring the loan to single parents. That would have to be clarified with the bank. In most cases, a guarantee from the bank is welcome. However, the guarantor must be solvent and know that he or she may have to pay a loan when the single parent can no longer pay.
As a guarantor, think of parents or close relatives. The bank will examine the guarantor’s solvency closely. In the past, there were guarantees with close family members. The cases fell and the family members as guarantors could not pay because there was no income at all. The law considers such guarantees to be immoral.
In addition to a guarantor, a co-applicant could also secure the loan. So the bank would have two borrowers, so that default risk is reduced. If all the bank guidelines are met with the second borrower, a normal high loan and not just a small loan can be provided.
The co-applicant, if he does not pay from the start, must then continue to pay the installments due in the event of a loan default.
The credit broker
If the single parent does not find a single parent loan, a loan broker might be able to help. However, this option should only be used if there is really an urgent need for money. The reason for lending to single parents will become more expensive if you hire a credit broker. But it is an advantage that he knows banks that do not have such strict requirements for a loan for single mothers.
Credit intermediaries are usually responsible for customers with poor credit ratings and bad credit ratings. The extent to which a credit-free loan can be used as a loan for single mothers depends on income. If it is just above the garnishment exemption limit, a loan could be provided for single mothers. On the other hand, a conventional loan could also be approved in this income situation.
The loan can be applied for online. The necessary documents such as proof of income and bank statements must be sent to the bank. This checks whether a loan is possible for single mothers and then communicates the loan approval if necessary.
The other aids
However, if the situation is so bad that no one agrees to lend a hand to single parents, as already mentioned there are social institutions that are happy to help. Be it with everyday objects or clothes for the children and also the mother. Meal vouchers are also provided. A warm meal could be taken at least once a day. There are the so-called boards that are there for needy people.
If the single parent has valuable jewelry, from better days or high-quality media devices, she could pawn them in the pawnshop. She receives cash for the equivalent and could therefore pay for the most urgent things.
If the financial situation improves again, the objects can be triggered again.