Taking out a personal loan as a single parent

Published on February 26th, 2021
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Single moms and dads have many financial responsibilities to juggle and this can be hard if you have one salary to do it on. Taking out a personal loan can give you that desired boost to your finances. However, there are a few things that need to be considered to make a personal loan work for your circumstances to avoid getting into a debt trap. Here is a guide on how to take out a personal loan as a single parent.

What can single parents use a personal loan for?

A personal loan is a diverse loan that can serve various needs, but most importantly it can help borrowers cover their expenses adequately with lenders offering loans that go up to a maximum of $50,000. You can use a personal loan to:

  • Consolidate debt
  • Purchase a car
  • Renovations
  • Cover medical expenses
  • Purchase furniture
  • Help you relocate and more

However, the amount that single parents can have access to will be determined by their credit score and the loan criteria which differs from lender to lender.

What could prevent you from having your application rejected?

Meeting the loans lending criteria and having a good credit score can make your personal loan application process easier. The application process is no different for single parents than any other borrower. But here are a few things that can cause your application to be rejected:

  • Having too many debts. If you already have a few outstanding debts and your salary is the only salary that is maintaining your household, it can be harder for lenders to approve your loan application.
  • Working part-time. A single parent that works part time can be viewed as a risk to lenders as this means that you don’t have a steady source of income. Your chances decrease will further if you supplement your income with government benefits.
  • Having unpaid debt from a co-signed agreement. Lenders assess whether you will be able to pay off a loan, and having unpaid debt can decrease your chances of getting one. This also means that if you were previously married and you co-signed a loan with your partner, or a friend or family member that has accrued debt you may not be able to get approved.

What features can I compare?

Your options may be limited as a single parent, but you still have the choice to compare your way to a loan that is suitable for your finances. Some of the main features to compare when taking out a personal loan is the interest rate. Having a good credit score can increase your chances of getting access to a low rate personal loan. Using a loan calculator can also be beneficial in knowing your monthly repayments.

The fees and charges that come with the loan are important to compare. Check to see if there you will be charged with a penalty fee for paying your loan off early. Check if the loan comes with restrictions on how much you can borrow and whether it offers flexible repayments to know if it is suitable for you.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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