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 on a sole income, but you still might need that car; those home repairs or that money for a bond.
This guide takes you through what you need to know about being approved for a personal loan.
Why may you not be approved for a loan as a single parent?
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 often don’t meet these requirements.
Single parents may also be receiving Work and Income payments, which some lenders may not recognise as a source of income. Single parents may be only working part-time and fail to qualify for the minimum income requirements.
What income do you need to receive to get a personal loan?
Harmoney Unsecured Personal Loan
- Borrow from $2,000
- 100% online
100% confidential application
Harmoney Unsecured Personal Loan
Apply today to get approved within minutes for up to $50,000.
- Max. loan amount: $50,000
- Loan term: 36 to 60 months
- Turnaround time: 99% of approved online applications funded in 24 hours
- Fees: Establishment fee of $200 for loans from $2,000-$5,000 and $450 for loans from $5,000-$50,000
- No early repayment fees
- Personalised interest rates based on your circumstances
How to compare your personal loan options
While you may feel you have limited options, it is still important to compare the products available to ensure you get the best option.
- Interest rate. Compare fixed and variable rate personal loan options and find a rate that is competitive.
- Fees. Personal loans come with both upfront and ongoing fees, so compare these, as they will contribute to the cost of the loan.
- 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 borrowing 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. Check your credit score for free with finder to see your borrowing position. The higher your score, the less of a risk you appear to a lender.
- Get advice. You can get in touch with a free financial counsellor at a Community Law Centre, who can take you through your financial options.
- Consider alternatives. There are a range of options that include low- and no-interest loans. These are designed to help people on low incomes pay for necessary expenditures, such as a car or home repairs.
- 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 file, and too many applications in a short space of time may appear irresponsible.