How to Avail Loan as a Single Mother? 5 Tips
It’s not easy to raise a child as a single mother.
You have to take care of your child, handle your career, and also budget for your overall personal and financial wellbeing.
Whether it’s for a new house or further education as a single mother, if you want to take loans, the process often seems harder than usual.
Of course, there are options like exploring co-applicants, and seeking government schemes. However, all of this is becomes easier when you have good focus on your financial planning, alongwith savings and investment.
Through this article, we have shared tips to apply for loans for single moms with bad credit score.
- Assess Your Financial Situation
As a single mother, before you apply for a loan, you must assess your current financial situation.
Start by analyzing your income sources. They could be one, or they could be multiple at times.
Many single mothers work different part-time jobs and multiple shifts a day, so their sources of income may seem fragmented and multiple.
But, full-time employed women could have a single or more than one income source.
- Calculate Your Debts
The next factor to calculate is Debt. Do see if you owe any debt to any creditor. It could be repaying a credit card, or repaying an existing loan.
You can start by updating your current financial standing which also includes sources, monthly expenses, and debts.
Single parents often fall under the debt trap because of many reasons. Failing to earn the cost of living can make earning ends meet difficult.
Also, many single parents (mostly moms) often suffer from financial difficulties after a broken relationship.
If you want to borrow loans as a single mother, first calculate your existing Debt and think of ways to repay it. It’s not a good idea to borrow on top of an existing loan or Debt.
- Analyze Borrowing Capacity
Now that you know your income sources, a good understanding of financial condition, and a clear picture of your current debts, you are ready to apply for a loan.
It’s important to calculate these so that you can afford to repay your EMIs every month without affecting your personal life and budget.
Always remember that your monthly repayment amount shouldn’t eat into your personal budget or childcare expenses.
Also, before you borrow, ensure that you have a good and strong credit score to begin with. Any creditor would go through your credit score before approving your loan.
- Create a Budget and Manage Debt
When you have a proper financial understanding, you have to start by creating a budget for the period of loan repayment. You must have a budget so that you can go on living a healthy life while also repaying your loan.
Start by tracking your income stream, frequency of earning, and different areas of your expenses.
Check how much you’re spending on your commute, expenses on your child, personal expenses, and cost of living.
With good expense tracking, you’ll know the budget you must create for yourself.
Include the debt repayment amount in your monthly budget. It’s the regular expenditure you’ll make alongside other costs of living after your loan is disbursed.
Also, it helps to consider debt management plans like debt consolidation if you’re struggling with Debt.
It’s best to communicate your current financial situation with your children. This helps them understand your decisions and reduce conflicts. In addition, children can also contribute to the solution at some point.
- Explore Different Loan Strategies
When you take a loan as a sigle mother, it would help to take support from your family. You can consider co-applicants ( your father for example) to increase your chances of loan approval.
Also, there are several government schemes and programs helping single parents with specialized benefits. It’s best to explore them if you’re in dire need.
It’s also helpful to seek advice from financial assistants and helpers who would give you the right direction.
Conclusion
Taking the burden of a loan is hectic as a single mother. But, if you calculate properly and use strategies like loan offer comparison, and taking help from co-applicants, it becomes easier.
Also, if your earning potential is steady but limited, you can stretch your repayment tenure long to support healthy living for both you and your child. As long as you’re following the tips provided in this article, you’ll go in the right direction regarding your loan application. However, it’s always best to seek professional advice for more complex queries.
