If you’re a single parent, know that there are options available to you when it comes to personal loans.
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 bond.
NAB Unsecured Variable Personal Loan
NAB offer a low interest personal loan with a low ongoing fee. Borrow up to $55,000
- Interest Rate From: 13.69% p.a.
- Comparison Rate: 14.56% p.a.
- Interest Rate Type: Variable
- Application Fee: $150
- Minimum Loan Term: 1 year
- Maximum Loan Term: 7 year
- Minimum Loan Amount: $5,000
- Maximum Loan Amount: $55,000
Personal loan comparison for single parents
Why might a single parent not be approved for a personal loan?
There is no one reason why single parents might find it difficult to be approved for a personal loan. In fact, some single parents might not have any trouble at all. For the ones that do, it comes down to the fact that are deemed too much of a risk by the lender.
Single parents are judged 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 debts means that they often don’t meet these requirements.
Single parents may also be receiving Centrelink payments, which some lenders won’t recognise as a source of income. Single parents may also be only working part-time and so fail to qualify for the minimum income requirements.
Personal loan options for single parents
There are a range of personal loan options available for single parents. The option you go with will depend on your individual needs and financial situation. Here are a few types of personal loans that you have available to you:
- Secured personal loan. This loan is taken out with a guarantee, such as a car, the equity in your home, or even jewellery. It can also be used to finance the purchase of a new asset, with that asset being used as the guarantee. Secured loans usually come with lower interest rates and fees as they are less of a risk to the lender, but keep in mind the lender will sell off the guaranteed asset if you default on the loan.
- Unsecured personal loan. This loan does not require a guarantee and also comes with less restrictions as to what you can use the loan amount for. As this is more of a risk to the lender you usually find these loans to have higher rates and fees.
- Car loan. If you’re looking to finance a new or used vehicle you can take out a car loan to do so. These loans can be taken out with a bank or other lender, or even with a car dealership. Car loans work similarly to secured loans as they use the car as a guarantee in case you default on the loan.
- Payday loan. A payday loan is a small, short term loan of below $2,000 that is often used in emergency situations. The turn-around time for these loans is quite quick, with some lenders being able to transfer you your loan amount within one hour. Keep in mind these loans come with extremely high interest and fees.
- Personal overdraft. This is a loan you set up with your existing bank whereby you can overdraw on your account up to and including a certain limit. You won’t pay fees until you overdraw, and you pay the overdrawn amount back at a fixed or variable rate.
How to compare your personal loan options
While you may feel you have limited options, it’s still important to compare the products you do find available to you to ensure you get the best option for you.
- Interest rate. The interest rate you’re charged on the loan, which can be fixed or variable, can contribute significantly to the cost of the loan. Compare rates to make sure you go with a competitive option.
- Fees. Most personal loans come with fees, some which may be ongoing and some which may be payable to establish the loan. Make sure you familiarise yourself with these fees and see how much you’ll be paying, and if they’ll be affordable on your budget.
- Restrictions. These restrictions could be on the amount you can borrow, on whether you’re able to make extra repayments, or if you can repay the loan early. See what you can and can’t do with the loan and if you’ll be too limited with how you want to use it.
- Repayment flexibility. This is an important consideration, as it could affect your ability to manage the loan. See if you’re able to make weekly, fortnightly or monthly repayments and if these will line up with your pay frequency. You should also note your ability to make additional repayments.
- The lender. The actual lender you’re borrowing from should factor into your decision, as this is a business you’ll have to deal with for the next few months or years. See how easy they are to contact and, if possible, read a few third-party customer reviews of the lender online.
Calculate your repayments
Before applying for any loan, you should consider using the calculator below to get an idea of what your repayments might be. Keep in mind this is only a guide, and each lender will assess your borrowing power differently.
How to improve your chance of being approved for a loan
- Consolidate your debts. If you are in debt, you may find it easier to access credit by first consolidating and paying down your debt. This will improve your credit rating as you will have less open credit accounts and you may also find your debts easier to manage with only one monthly repayments as opposed to several. You could consider a balance transfer credit card or a debt consolidation loan to do this.
- Order a copy of your credit file. Ordering a copy of your credit file can give you a chance to check your credit history and see how a lender sees you. You might even see some incorrect listings on your file that you can request the creditor to remove. You’re able to order a free copy of your credit file from one of main credit reporting agencies in Australia.
- Consider alternative financing options. There are also alternative financing options that can be considered if you find you don’t qualify with a traditional bank or lender. You could seek the services of a free financial counsellor, or consider some of the government loans that are available to people on lower incomes.
- Talk to the lender before you apply. Another option you have is to discuss your eligibility with the lender before you apply. Remember that every loan application you make will show up on your credit file, and making too many applications in a short space of time may appear irresponsible.
How to apply for a personal loan
If you’re looking to apply for a personal loan you can first compare your options using the comparison tables on this page and across finder.com.au. Once you’ve found a loan that you want to apply for, review the application requirements and click ‘Go to Site’ to be redirected through to the lender’s online application form.