Surely everyone has experienced this before. A larger purchase has to be made, but unfortunately the financial means are not sufficient. Then good advice is often expensive. Often, only a small loan from a bank comes into question. Unfortunately, this option does not apply to everyone, because especially a loan for single parents who are also unemployed or have a poor credit rating is almost impossible to get. In the meantime, there are real alternatives to a bank, where lending is also judged and other standards are often set.
What are the criteria according to which the bank grants a single parent loan?
Most banks do not consider single parents to be creditworthy, especially not if there is still a poor credit rating. Often the reason is that a child has to expect significantly higher expenses than income. We owe this, to give just one example, to the fact that most banks are very concerned about collateral when lending. Since single parents usually do not have the desired collateral, a loan for single parents is also not approved. If there is also a negative Credit Bureau entry, a positive decision is completely impossible.
When does the bank grant a loan to single parents?
In order for the bank to make a positive credit decision, there are a few things to consider. When taking out a loan for single parents, the banks take into account the permanently generated income. Child benefit and any maintenance are counted towards income in any case. If the single parent can prove that the living expenses and the loan installment can be covered, there can be a positive decision.
However, if it is determined during the review that the amount of income is insufficient, there is the option of involving a guarantor or co-borrower. After a positive check, this is included in the loan agreement. This often gives you the option of not just getting a small loan, but a normal loan. In such a case, however, it should be noted that the so-called citizen bears the entire credit debt in the event of the main borrower’s insolvency. Here, all eventualities should be carefully checked in advance before choosing this step.
The alternative to bank loans.
A real alternative for single parents who need a loan are without a doubt the offers from online and direct banks. These have designed their offers especially for special marginalized groups, such as people with a negative Credit Bureau entry, low earners or people with a moderate credit rating. The selection of the offered loans on the Internet is very numerous, so you should also carefully check in advance which offer can be the right one. In order to get an overview of the loan amount and the monthly installments, a free loan calculator is available at numerous financial portals.
The advantages of an online loan for single parents are the quick processing and the longer terms. This means that you can get the desired loan even with a lower income. Through a long term, lower rates are achieved, which leads to a lower burden on the household budget. Thus, single parents are given the opportunity to service the loan without problems and at the same time have more financial scope in the private sector.