If you are a single mom or dad, it would be quite challenging to qualify for a traditional bank loan. Banks and other conventional financing institutions are simply too picky on who they choose to offer their loan products and unfortunately, single parents are generally not included in their short list. However, this doesn’t mean that your different from the rest of the borrowers in the UK – you still might need to borrow money in times of emergency situations when you’re strapped of cash and are caught up with an unforeseen cost. Below are some of the things that you might want to know so you can secure a single parent loan that is especially suited to your needs and present circumstances.
Why a Single Parent Loan is a legit loan
A single parent loan is something that you can genuinely rely on in times of financial need. The type of loan is protected and supported by the Equal Credit Opportunity Act which is a federal statute that forbids lenders from making prejudiced decisions in processing a borrower’s application due to his or her personal demographics like race, religion, and in this case, marital status. It also bans lenders from discriminating an applicant if he or she relies on public assistance programs as source of income which means that you can also get qualified for a loan if you are someone who is relying from government welfare and benefits. Simply put, you will still enjoy the same credit opportunities as those who are married through a single parent loan. You can take comfort on the equal credit opportunity act as your way to enjoy the kind of funding that you can genuinely count on.
The hurdles in taking out a single parent loan
A single parent loan is processed just like any other type of loan wherein the lender will evaluate your application based on your credit history and level of affordability. This means that if you are a single parent, then you will need to possess a specific amount of income that is enough to satisfy the minimum requirements to become approved. You will also need to possess a certain credit score depending on the lender and the type of single parent loan that you are applying for. If you apply for a personal loan for instance, and your source of income is through government benefits or part-time employment, then it may not be enough to cover the repayments of the loan especially of you are trying to borrow a significantly large amount.
Single parent loan options that you can consider
There are several single parent loan options that you can consider to give you a kind of funding that suite your needs and present circumstances best and they include:
- Personal Loans – The loans are unsecured forms of credit that allow you to secure borrowing amounts anywhere from £1,000 to £25,000 without securing your loan agreement with collateral. You can then pay back the money that you owe in 3 to 7 years depending on the agreement but because of the absence of collateral, you will need to have a good credit score of at least 670 to become approved.
- Secured Loans – The single loan option requires you to offer one of your assets like your home or vehicle as collateral to your credit agreement. The presence of security allows lenders to grant you large amounts of borrowing for as much as £50,000 with long repayment periods that can last for 25 years and this is all possible even if you don’t have a good credit rating. However, there is a real risk that you will lose the asset that you put up as collateral in the event that you default from your loan.
- Short-term online loans – If you have bad credit and want to take out small amounts of borrowing in an instant, say £100 to £2,000, then short-term online loans are what you should consider. Qualifying for the type of single parent loan is relatively easy with minimal eligibility requirements and high approval chances.
Comparing the different single loan options in the market
Sometimes it may seem like the available options are pretty limited when you’re scouring the market for a reliable single parent loan. However, you should still compare your options carefully so you can enjoy the right deal for the best price. Here are some of the things that you need to look into when you compare the available options that you can find.
- Interest Rate – Try to consider the interest rates that you are qualified for and not on what is being advertised in the lender’s website. This is because the interest rates that are advertised are often reserved for those who have stellar credit rating.
- Extra fees and charges – Interest rates are just one part of the total cost that you will have to bear in your loan agreement. There are also extra fees and charges that you need to watch out for when you compare the best single parent loan offer in the market.
- Limitations – There are certain limitations that you also need to check such as the maximum amount you can borrow, how you can use the loan proceeds, and whether there are extra charges when you make advance payments for your loan.
- Payment terms – Evaluating your payment terms is crucial as it will have a direct impact on your finances. Try to see if it’s possible for you to choose a payment term that is ideal to your monthly earning outgoings, whether it’s fixed on a monthly basis or if you can opt for bi-weekly or weekly payments as well. Try to see if you can make early repayments without penalties as well so you will know what to expect.
- Lender’s reputation – There are many reputable lenders that can cater your need for a single parent loan but there are also those that are dishonest. Try to check the lender’s track record and on how it has treated is clients in the past before you make an application.
Once you have considered all the important things mentioned above, it would be easier for you to land a single parent loan that will give you the best possible credit agreement.
305.9% APR. £400 borrowed for 90 days.
Total amount repayable is £561.92 in 3 monthly instalments of £187.31.
Interest charged is £161.92, interest rate 161.9% (variable)
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