Personal Loans for Single Moms

February 19, 2024 Personal Loans

Key Takeaways

Personal loans can be good for:

  • Childcare duties
  • Consolidating debt
  • Dealing with emergencies
  • Surviving financially as a single mom
  • Improving stability

Remember that seeking out a loan to empower you to take care of yourself and your child isn’t a sign of weakness, but strength. Your love and determination can help ensure a happy and secure future for your family.

Finding a reputable lender can increase your chances of a successful repayment and a low interest rate. Here are some lender options to get you started with finding a suitable loan.

  • Credible
  • SoFi
  • Discover
  • LightStream
  • Upstart
Personal Loans for Single Moms

Despite the saying money can’t buy happiness, it can help eliminate financial struggles and debt. Around 31% of single moms struggle with poverty while taking care of their children. The financial hardships can exacerbate mental stress, leading single moms to wonder how they can survive financially, especially in face of emergency expenses.

Personal loans are a tool that can help pay for urgent expenses, consolidate debt, and overcome financial hardship. In this guide, we will go over how a personal loan can help single moms overcome financial hurdles, as well as advice on how to survive financially as a single mom.

Understanding the financial landscape for single moms

Research shows that there are 15.09 million children living with a single mother in 2023. Many single moms face financial challenges as they strive to create a happy and healthy environment for their children.

Common financial struggles that single moms encounter include:

  • Groceries
  • Monthly rent
  • Baby formula and other dietary needs
  • Low income
  • Home and vehicle repairs
  • Unemployment

In addition, insufficient credit scores and financial history can make it difficult to navigate the life of a single mother. When emergencies arise, paying the bills can be a heavy financial burden.

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The role of personal loans for single moms

Personal loans can be a valuable tool to help single moms overcome financial hurdles and survive financially. There are many different types of loans. Here are the main ways a personal loan can help a single mom.

Different types of loans

Unsecured personal loan: Most personal loans are unsecured, which means that you don’t need to offer any assets as collateral. The lender judges your loan application based on your financial standing and credit score.

Secured personal loan: Also known as collateral loans, secured loans require you to offer the lender a valuable asset before you can receive the loan funds. This asset can be repossessed by the lender if you miss payments and fail to pay back the loan according to the designated loan terms and conditions.

Mortgage: If you’re looking to buy a house, a mortgage is a secured loan specifically for this purpose. For single moms without solid credit and income, it may be challenging to obtain a mortgage alone. However, there are certainly mortgages for single mothers.

Home equity loans and lines of credit: If you own property, you can tap into the equity through a line of credit or loan. These options use your home as collateral, which poses a risk, but typically offer much lower interest rates than other loan types.

Peer-to-peer loans: A peer-to-peer (P2P) loan is an alternative to traditional personal loans. Instead of borrowing from a bank or online lender, you are borrowing from other individuals and investors. This could help you obtain a loan even after traditional lenders have rejected your loan applications.

Benefits of personal loans for single moms

Fast funding: If you need to deal with urgent expenses, a personal loan is one of the fastest ways to obtain funds. This can help you quickly manage an emergency, which could make a great difference for the health of you and your child.

Versatile use: Compared to usage-specific loans and financing methods, a personal loan is more flexible. You can use the loan funds for nearly anything, with very few exceptions. If you have any funds left, you can save them for further use later.

Consolidating debt: A single mom with many different debts, such as student loans and existing personal loans, might want to consolidate the debt to streamline their payments.

Deal with emergencies: If you face a financial emergency, a personal loan could be an invaluable way to help you and your child get out of a tricky situation.

No collateral: Since most personal loans are unsecured, you won’t need to put up any assets as collateral. This makes it easier to qualify for a loan even if you can’t back it with valuable assets like jewelry, property, or vehicle titles.

Fixed repayment schedule: Personal loans are installment loans with predictable repayment schedules. This makes it easier to budget, which can be beneficial for households with only one source of income.

Potential to establish credit: If you don’t have credit or have poor credit, making consistent payments on a personal loan is a good opportunity to improve your credit. This can be beneficial as long as you pay the loan installments on time and regularly.

Drawbacks of personal loans for single moms

Potential debt spiral: Single moms who are already burdened with debts might find another personal loan overwhelming. This could lead to a debt spiral, resulting in a need to obtain new loans to pay off previous debt balances.

Interest acculumation: Having an active loan means you will need to pay off the principal loan amount plus interest. This interest can accumulate over time, so it’s important to weigh whether you truly need the loan and consider the cost of borrowing before taking out a personal loan.

Impact on credit score: If you fail to make loan payments on time, you can hurt your credit score by up to a hundred points. Defaulting on the loan can have even worse consequences. The potential negative impact on your credit score should be considered before you take out a loan as a single mom since it can make it harder to obtain loans and credit extensions in the future.

Higher interest rates: Compared to other financing strategies, a personal loan for general use may have higher interest rates. The better your credit score, the better the loan terms you will be able to receive. Make sure to compare interest rates before committing to a personal loan, that way you can increase your chances of obtaining an affordable loan.

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Expert advice on managing finances as a single mom

Prepare a clear budget

Creating a detailed, realistic budget is crucial for any single parent. Here are some guidelines that could help you better prepare a budget in a household with a single income.

1. Assess your income: Add up your total monthly income, which may include child support, alimony, salary, government assistance, and other forms of income. This is how much you can expect to have in your bank account each month.

2. List your expenses: Knowing your expected expenditures each month and year can give you a better idea of how much disposable income you have and whether you need a loan. Categorize your expenses into necessities (e.g. rent and utility bills) and non-necessities (e.g. Netflix subscription).

3. Prioritize essentials: Essentials like rent and food should be prioritized over non-essentials, such as luxury items and entertainment.

4. Build an emergency fund: If you haven’t already, start building an emergency fund in a separate savings account. Distinct from your typical savings account, this fund should only be used in case of emergencies.

5. Cut back on non-essentials: If possible, start cutting back on purchases and transactions that you can afford to lose. This allows you to start with a tighter budget, which can keep you prepared for any emergency expenses.

6. Track and monitor spending: Monitor your spending to discern patterns and habits. This will allow you to make any adjustments to your budget.

Importance of an emergency fund

In today’s unpredictable economic circumstances, it’s more important than ever to build up a healthy emergency fund. These emergency savings should ideally set you up with three to six months’ worth of living expenses. This way, if an unexpected incident occurs such as job loss or sickness, you will have some breathing room finances-wise.

When it comes to growing your emergency fund, it’s recommended to open up a separate savings account. Avoid dipping into this savings account unless there is a true need.

Establish and enhance your credit score

There are two major types of credit scores: FICO and VantageScore. Credit scores are used for banking decisions, loan decisions, evaluating your interest rates, and more. Establishing a good credit score is essential for a healthy financial standing.

Building a good credit score isn’t easy, but following the best credit score practices can help you boost your credit score reliably over time. Here are some generally effective methods of improving your credit score.

  • Pay as much of your credit card balances each month as possible, not just the minimum payment
  • Make debt payments on time and regularly
  • Keep old accounts open to maintain credit history length
  • Avoid opening too many new accounts
  • Settle any outstanding debt
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Specific personal loan options for single moms

Government-backed loans and grants

Other than personal loans from traditional and online lenders, consider applying for government assistance for single moms. Assistance may include:

  • Housing assistance
  • Food stamps
  • Legal assistance
  • Education grants
  • Medical and healthcare assistance

Non-profit organizations

Many charities and non-profit organizations seek to help single parents who are struggling financially. Research is essential since it’s important to seek help from a reputable and trustworthy group. Here are a few well-known organizations that provide help to single moms and parents.

  • Single Parent Project
  • Bridge of Hope
  • Life of a Single Mom
  • Mercy Housing
  • Feeding America

Eligibility requirements

To qualify for most single-parent assistance benefits, you will need to meet the eligibility requirements. Here are the most common criteria you might encounter for any type of single parent assistance program.

  • Income level
  • Household size
  • Citizenship
  • Residency status
  • Employment status and type
  • Child custody and child support
  • Total assets and resources
  • Health and disability
  • Age of children
  • Crisis or emergency situation
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Uncommon information and strategies

Community support programs

Other than loans and government assistance, it’s also a good idea to look into community support programs and local resources for single moms. The community can provide valuable assistance for childcare and single parents, especially if you’re currently going through a crisis.

Here are some different types of programs that you might find beneficial.

  • Skill development and training programs
  • Job search and employment assistance
  • Legal aid services
  • Mental health and counseling services
  • Healthcare clinics
  • Housing assistance initiatives
  • Discounted transit assistance

Precautions and risks

While a personal loan can provide valuable assistance in times of need for a single mom, it also carries inherent risks. Remember that a loan is a source of debt that you will need to pay off, including both the principal loan balance and interest. This repayment can be difficult for borrowers who are struggling with a lack of income.

Here are some potential risks associated with personal loans.

High interest rates and fees

If you lack good credit, you might be subjected to high interest rates. Fees for processing the loan, such as the origination fee, may also raise the cost of borrowing.

Impact on credit score

Failing to pay back the debt can result in serious credit score damage. On the other hand, responsibly paying the loan installments on time and consistently can improve your credit.

Predatory lenders

Single moms may be more vulnerable to predatory lending practices, since these predatory lenders know to target groups who face financial challenges and require money for important purposes. Because of this, it is crucial to watch out for scammers and lenders who offer loans for exorbitant interest rates and unfavorable terms.

Here are red flags when borrowing to beware of:

  • Guaranteed loan approval
  • Vague lending terms
  • Loan offer with an interest rate significantly different from others
  • Lender refuses to answer questions
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Finding a personal loan

Not sure where to start looking? Compare our reputable lenders here and find the best option for your situation.

Credible Personal Loans
Year Founded
2012
Credit Score Required
600
Pricing
Free
BBB Rating
A+
Minimum Loan Amount
$600
Max Loan Amount
$100,000
Minimum APR
5.4%
Maximum APR
35.99%
LendingTree Personal Loans
Year Founded
1996
Credit Score Required
560 or higher
Pricing
Free
BBB Rating
A+
Minimum Loan Amount
$1,000
Max Loan Amount
$50,000
Minimum APR
6.99%
Maximum APR
35.99%
LightStream
Year Founded
2004
Credit Score Required
680
Pricing
-
BBB Rating
-
Minimum Loan Amount
$5,000
Max Loan Amount
$100,000
Minimum APR
7.49%
Maximum APR
24.49%
Fiona
Year Founded
2019
Credit Score Required
600
Pricing
Free
BBB Rating
A
Minimum Loan Amount
$1,000
Max Loan Amount
$100,000
Minimum APR
4.99%
Maximum APR
35.99%
AmOne
Year Founded
1999
Credit Score Required
500
Pricing
Free
BBB Rating
A+
Minimum Loan Amount
$100
Max Loan Amount
$50,000
Minimum APR
5.99%
Maximum APR
35.99%

About The Author

Author Avatar

Ru Chen

Content Writer

Ru Chen is a content writer with several years of experience in creating engaging and well-researched articles. She mostly writes about business, digital marketing, and law. In her free time, she can be found watching horror movies and playing board games with her partner in Brooklyn.


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