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Loans for low income single mothers
If you’re a single mother on a low income, there are options available when you need extra funds.
When you’re earning a single income, trying to get a personal loan can seem like an uphill battle. The eligibility criteria for many banks and lenders can be difficult to meet, but you still need that car, those home repairs, or that money for a bond. Thankfully there are loans for low income single mothers available so you can get the finance you need.
This guide takes you through what you need to know about being approved for a loan as a single mother.
Why is borrowing as a low income single mother more difficult?
Lenders judge single parents 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 debt means they might not meet these requirements.
Single parents may also be receiving Work and Income payments, which some lenders may not recognise as a source of income. On the other hand, a single mother may only be working part-time and fail to qualify for the minimum income requirements.
Loans for low income single mothers have less-stringent lending criteria and usually require an income of $400-500 per week to be eligible.
Compare loans for low income single mothers
How to compare your personal loan options
While you may feel you have limited options, it is still important to compare loans for low income single mothers to ensure you get the best option.
- Interest rate. Compare interest rates among lenders to find a rate that is competitive. Many lenders advertise their rates as a range, so you may not know what rate you’ll receive until you apply.
- Fees. Personal loans come with both upfront and ongoing fees. These contribute to the cost of the loan so look at the total cost with these included.
- Restrictions. There may be a restriction as to how much you can borrow, whether you can make extra repayments or repay the loan early.
- Repayment flexibility. This is an important consideration, as it could affect your ability to manage the loan. See if you can make weekly, fortnightly or monthly repayments and if they line up with your pay frequency. You should also note your ability to make additional repayments.
- The lender. The lender you borrow from should be a factor in your decision, as this is a business you will have to deal with for the next few months or years. See how easy the lender is to contact and, if possible, read a few third-party customer reviews about them online.
How to improve your chance of being approved for a loan
- Check your credit score. Your credit report is what lenders use to determine your creditworthiness. The higher your credit score, the less of a risk you appear to a lender. You can access a copy of your credit report for free from Credit Simple, Centrix, Illion or Equifax.
- Get advice. You can get in touch with a free financial counsellor who can take you through your financial options. MoneyTalks is a free helpline that you can reach by phone, email or live chat.
- Consider alternatives. Low- and no-interest loans are designed to help people on low incomes pay for necessary expenditures, such as a car or home repairs. The Good Shepard NILS loan allows you to borrow up to $1,000 interest free.
- Borrow a lower amount. You should only borrow as much as you need and can afford. Lenders may reject your loan application if they think you can’t afford the repayments, rather than offering you a lower amount.
- Talk to the lender before you apply. Discuss your eligibility with the lender before you apply. Remember, every loan application you make shows up on your credit report, and too many applications in a short space of time may appear irresponsible.
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