Raising a child or children on your own can be very stressful, especially if you don’t have enough financial resources for everyday living.
Good thing, there are various loans for single mothers available.
Financial assistance is given to single parents either through private financial programs or through government efforts. But before applying for a government or private program, you should take your time to read about all the factors to be considered when starting off with your loan. By doing so, you will have a better idea of how things work out (especially if you are a first timer).
Considerations before applying for a loan
Before availing of any type of loans for single mothers, think about your income. Consider the amount of money you earn. Is it enough? Remember, when you apply for a loan, you have to allot money to pay up for the principal amount you borrowed, plus its interest. Do you have spare? If so, well and good but if you don’t, better find a way to earn extra money.
Next, when you consider getting a loan, make sure to stick closely to your payment plan or you might end up paying higher interest for delayed payments. In addition, your credit rating will go bad, which is not beneficial if you decide to avail of another loan in the future.
Credit rating is a term that refers to the evaluation given by a credit rating agency on your capacity to pay up your debts. Most loans for single mothers require a credit check and if you have a bad credit rating, most likely, you’ll get higher interest or worse, your application will be denied.
So, before applying for any loan, better check your credit score first either through mail order or online.
Type of loans for single mothers
The next step is to take a look at all the different loans for single moms. What do you need the money for? Take time to read and decide on which one would suit you best.
Home loans – These loans will help you own a house rather than paying rent every month. Home loans are better known as mortgage loans and they require good credit rating and a regular paycheck.
Home loans may be hard to qualify for as a single mother, but it’s not impossible to obtain. Just remember owning a house will provide a better environment for you and your child.
Student loans – Student loans are probably the most recommended type of loan for single mothers, as education can be seen as an investment in the future. Student loans can either be federal or private. When you apply for a federal student loan (which is backed up by the government), you don’t need any credit history to borrow money and they also have flexible payment terms.
On the downside, you cannot expect for a very big amount for the loan but when you decide to go with a private loan, you can request a bigger sum. Weigh the odds and the choice is up to you.
Auto loans – Auto loans are basically used to purchase a vehicle. Just like a mortgage loan (and especially as a single mother), it also requires good credit status. You can enroll for an auto loan in any car loan dealer or bank.
To avail a lower interest, it is recommended that you provide initial down payment so that the remaining balance will only be the interest and not the entire car price itself.
Business loans – Not the most used type of loan for single mothers, but if you are into business, the business loan is intended for you. Whether you are just starting up your business or you are already into expansion, this type of loan is highly recommended.
A business loan is actually a form of secured loan which requires a house, property or any valuable item that will serve as collateral. Some lending companies also seek for proposals for your business plan as a backup security.
Bad credit loans – If you think that having bad credit means the end of acquiring quick cash for you, well you’re wrong. There are still loans for single parents with bad credit but they usually have a stricter repayment plan. Also, it has higher interest rates compared with other loans.
If you haven’t settled your bad credit yet and you need quick cash for emergency purposes, this loan is ideal for you as long as you pay well.
Now that you have seen the most common types of loans for single mothers, it’s time to decide on which one to apply for. There are many available resources on the different loans in case you need a deeper understanding on each.
Truly, it is difficult to raise a child on your own. With the highly competitive world we have right now, you need to come up with smart ways to survive each day. Good thing, there are various loans for single mothers that could provide financial assistance during tough times. Use them wisely!