The single mother with a full-time job fulfills the image of a functioning family these days. The range of all-day care is very generously set up so that a single parent can be both a full-time employee and a loving mother. A partner is often no longer needed to prepare the children for growing up. A loan for a single mother would help her balance household and childcare.
The credit for a single mother – the situation
The single mother has her own income and thus almost any credit request can be fulfilled. She can even finance her own car, a cheap car loan with small installments makes it possible.
However, the reality is usually different. There are two or even three children to be brought up so that full-time employment is desired but cannot be carried out. There is a problem child among the crowd that cannot be easily handed over to a day care center. The single mother can forget the full-time job. It is often only a part-time job that only brings more than poor income, so that many mothers are dependent on government aid.
Customers are welcome at banks. Nevertheless, even in such situations, the desire for a loan for a single mother is raised. As comprehensible as that is, the question should still be: Can I even afford a loan? Do additional financial charges still fit in my monthly budget?
These are also questions that the bank will ask. She too will draw up a budget and compare the mother’s income and expenses. A loan for a single mother could only be approved if the calculation provided financial scope. A loan is always an additional financial burden that often lasts for several years.
When there are several children to look after, financial bottlenecks occur more and more often. Child benefit is far from sufficient. A loan should only be taken out if there is an urgent need. Consumer goods should be postponed until later, if something has been saved. Even everyday items should not be purchased with a loan request.
If you are in a financially tense situation,
There are so-called furniture stores in every municipality or city, where, for example, you can often still buy new washing machines for a few USD. There is also a clothing store, so high-quality children’s clothing can often be purchased. You don’t have to order from the mail order company. Here you are only tempted to order more than you can afford.
Paying in installments for mail order companies can also strain the budget. If the installments can no longer be paid, the first negative entries come into Credit Bureau, which can completely obstruct the financial future.
However, if urgent bills such as utility bills or electricity bills have to be paid, a loan could make sense for a single mother. However, the rates should be chosen so that they adapt to the income. In this way, the monthly charge can be planned with small installments and a longer loan term.
The loan for a single mother is generally becoming more expensive. But the loan can also be paid in small installments without the risk of default. However, the loan amount will only be the amount of a small loan, think of 5,000 USD.
However, there must be some income to be able to pay a loan at all. A single mother with a child should have more than 1,440.00 USD net. It is only from this sum that the usable net income increases. Child benefit will not be included in the bank’s calculation.
A mother with two children would have to be 1,890.00 USD net so that she can be classified as creditworthy at all. The positive Credit Bureau is very important when granting a loan, which is obtained by the bank and signals to the bank the payment behavior of the loan seekers.
Before banks grant a loan to a single mother, they will check whether a loan is necessary at all. When making a loan approval, many factors must be coherent. Because every monthly installment becomes an additional financial burden. The creditworthiness of a single parent is rated rather poor by the banks. As a result, the loan has higher interest rates than a good credit rating. Therefore, as mentioned before, mostly a small loan will be approved, which makes the installments and the loan term manageable,
If a small loan amount is insufficient or if the bank refuses a loan for a single mother, the loan opportunities could be increased with the help of a guarantor. If a guarantor agrees, the banks often give in and agree to a loan. If no other collateral such as capital-forming insurance or maybe a property can be provided, the bank will usually agree to a guarantee.
Perhaps the parents or a good friend could be named as guarantors. However, these must be solvent. If there is a loan default, the guarantor must continue to pay the loan.
Another option could be a second borrower. He also increases the credit opportunities. However, the guarantor and the second borrower must be solvent, ie a sufficiently high income, a clean Credit Bureau and a permanent position. If one of the two people can be named, a higher loan amount could also be possible.
One possibility would also be to register a land charge, but only if there is real estate.
The loan brokerage
Another option would be to consult a credit broker. These advertise their services on the Internet and can help with borrowing, especially in difficult circumstances. However, the commission will make the loan more expensive. But the advantage of a credit broker is that he knows banks that still approve a loan even if the loan conditions are not ideal.
Usually you hire credit intermediaries when there is a bad Credit Bureau. But whether the single mother is predestined for a Credit Bureau-free loan depends on her net income. If this is above the garnishment exemption limit, it could work with a Credit Bureau-free loan. An example: A single person must earn about 1,110 USD net in order to receive a Credit Bureau-free loan.