Nowadays, very few people have sufficient financial resources to fulfill a wish or dream, or to make an important purchase. Single parents find it even more difficult, which is why a loan for single parents is often sought. Finding this loan can be more difficult than is often thought. Especially for single parents, it is carefully checked whether the repayment of the loan is ensured over a long period of time. To this end, the lenders draw up a household bill where the entire household budget is disclosed in detail.
Are there any difficulties with the single parent loan?
Just like all other loans, a single parent loan is not a problem as long as there is a sufficiently high and regular income. It is only important for every loan that it is secured by the creditworthiness. It is very difficult if the income consists only of the state parental allowance, child benefit and maintenance payments. Even if the amount of maintenance is not small, it is not accepted as security by lenders. Child benefit and maintenance are not considered attachable benefits. Many banks still offer a single parent loan, with little difference from a normal loan. If a bank advertises directly with such an offer, the maintenance payments are generally also recognized.
But no matter what a lender recognizes as income, the credit check information is obtained from all borrowers. It is important that there are no negative entries. Nevertheless, lenders always assume a higher default risk for the single parent loan and thus the interest rates are higher compared to other loans. Interest rates can really only be reduced if the lender is offered additional collateral. The collateral then includes a guarantee or saved pension or life insurance. A guarantor or a co-applicant is often required, who then joins the contract. Risk life or credit default insurance is also often offered as additional security.
The alternatives to the house bank
Many people do not want to go to their own house bank to have all documents checked there. They then prefer to contact a credit broker who is looking for a suitable loan. There are also portals on the Internet where loans are offered by private individuals. Lending is often a little easier here, provided there is sufficient collateral. The negotiation options often give you a better chance of getting the right loan amount and a relatively good interest rate.