The eligibility criteria for many banks and lenders can be difficult to meet with only one income. However, you might still need some extra cash to cover car repairs or an unexpected bill. Our handy guide will take you through what you need to know about being approved for a personal loan as a single parent.
Can a lender consider my marital status when evaluating my application?
No, a lender cannot deny or approve your application based on your martial status.
That being said, if you’re divorced, you’re likely still liable for any debt accumulated as a married couple if you had shared finances. Unfortunately, even if it was your partner who built most of the debt, as a co-signer you are bound to the agreement.
Why might a single parent not be approved for a personal loan?
Single parents are judged by the same lending guidelines as every other borrower, but the fact that they rely on a single income and are often solely responsible for their debts means that they occasionally don’t meet the necessary eligibility requirements set by the lender.
If you’re receiving government benefits or working part-time hours, this may be scrutinized as an insufficient source of income that will not allow you to cover your necessary monthly expenses and pay back your loan at the same time.
What income will I need to get a loan?
This will vary between lenders and the amount of money that you are looking to borrow, however some lenders have minimum income requirements as low as $15,000. Keep in mind your repayments will likely be weekly, bi-weekly or monthly, meaning living expenses and bills will need to be factored into your monthly budget. Lenders will determine if you’re able to pay your loan back with the money you’ll have leftover after living expenses have been covered.
How much can I borrow with a personal loan?
Personal loans range in amounts from $2,000 to $35,000, with a few lenders offering smaller and larger loan amounts. Depending on how much you borrow, these types of loans will typically need to be repaid in three to seven years. Additionally, personal loans are usually only granted to those with a credit score of 650 or higher.
Before applying for a loan, you should calculate how much your loan will cost in full and then calculate what your repayments might be every week, two weeks or month. Factor the repayment amount into your usual monthly budget, taking into account your income and usual expenses. Keep in mind each lender is required to assess your borrowing power and ability to repay before extending a loan offer to you.
How do I compare my options?
When comparing your loan options, you should take the following factors into account:
Interest rate. Compare the interest rates on offer between a variety of different loans. Some lenders will stay competitive by charging lower interest rates on their loans.
Fees. The charged interest rate doesn’t always tell the full story. Loans can come with both one-time and ongoing fees, so compare any fees against the interest rate since they will contribute to the cost of the loan.
Restrictions. You may be restricted in how much you can borrow, what you can use the money for, whether you’re able to make extra repayments or if you can repay the loan early.
Repayment flexibility. This is an important consideration, as it could affect your ability to manage your repayments for the loan. Some lenders will allow you to choose between making weekly, bi-weekly or monthly repayments. Repayments generally coincide with your work pay schedule.
The lender. The actual lender you’re borrowing from should factor into your decision, as this is a business you’ll have to deal with for the next few months or years. See how easy the lender is to contact and how the customer service is. If you have an “off” feeling about anything, choose another lender.
How do I improve my chances of being approved?
Check your credit score. You can check your credit score for free to find out which loans you are eligible to apply for. The higher your score, the less of a risk you appear to the lender, which means you will have more loan options available to you.
Get informed. If you’re denied a loan, ask the lender why. Knowing the reasons can help you move forward and submit a stronger application.
Consider alternatives. Taking out a loan might not be the best option for you right now, and you may have alternatives depending on your situation. You might be able to make some extra cash by taking on a small side job or get an interest-free loan from a friend or family member.
Borrow a lower amount. A good rule of thumb is to only apply for as much money as you need to borrow, as lenders may reject your loan application rather than offering you a lower amount.
How do I apply for a loan?
Before you apply for a loan, do some research and compare different loans and lenders. Once you’ve found a loan that you want, apply directly on the lender’s website.
As part of your application, you’ll need to provide your contact information, financial information and the amount you’d like to borrow. Some lenders will approve your loan almost instantaneously, while others may take some time. If your loan is approved, the lender will send you a loan contract to read over and sign. Read the loan contract from top to bottom in order to understand all of the charges you may face.
Once you sign and return the loan contract, you’ll likely receive your loan directly into your account by the next business day. Some lenders may take longer to disburse the funds.
Frequently asked questions about loans for single parents
Yes, you can use your loan for any legitimate purpose, including paying for a vacation. Personal loans are often used to consolidate debt or pay off an emergency expense, but you can use your loan to finance a vacation. Keep in mind that using a loan irresponsibly could lead you into more debt and leave you with a bad credit score if you can’t keep up with your repayments.
You may be able to get your repayment deadline extended if you reach out to your lender and explain the situation prior to the bill due date. Always try to keep an open line of communication between yourself and the lender.
Kyle Morgan is a producer for finder.com who has worked for the USA Today network and Relix magazine, among other publications. He can be found writing about everything from the latest car loan stats to tips on saving money when traveling overseas. He lives in Asbury Park, where he loves exploring new places and sipping on hoppy beer. Oh, and he doesn't discriminate against buffalo wings — grilled or fried are just fine.
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