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Personal loans for single mothers

Balancing the family finances as a single mum can seem impossible. Food, bills, rent and life's extras all seem to pile in the door at once, making it hard to make ends meet, especially on one income.  Unfortunately being a single parent also makes it all the more harder to get finance for a personal loan, when you need to pay for a big expense such as a new washing machine, unexpected medical bills or a much needed holiday after a busy year.

Fortunately, a personal loan can help you manage your finances, but it is always important to research your options carefully and get the best deal possible for your finacial circumstances.

Can single mothers apply for personal loans?

Yes. While it is a lot harder to apply for and pay off a loan with just one income, it is possible. What the lender will want to know is whether you have enough money to pay for the loan, without ending up in financial stress. Other things that will play a major factor in whether you get approved is your current savings, the amount you are applying for, the reason for the loan and your credit score. 

What is a credit score and how does it affect my loan application?

Your credit score is based on your history of borrowing and repaying money – the better your credit history, the higher your credit score. Borrowers who repay bills on time, pay off loans, and manage their credit cards are more likely to have good credit scores. Bad credit borrowers are more likely to be those who miss bill payments, default on loans, or have outstanding debts owing.

Banks and other lenders use your credit score to assess whether you’re likely to repay a loan. Good credit borrowers may see their loan applications approved and even be offered discounted interest rates, while bad credit borrowers may see their loan applications declined or be charged higher interest rates.

To learn more about your credit score and what steps you can take to improve it, visit our credit score page.

Can single mothers with a bad credit score get personal loans?

If you’re a single mother with a bad credit score, it may be more difficult for you to successfully apply for personal loans, but it’s not impossible for you to borrow money.

Some lenders specialise in loans for borrowers with bad credit, though you may need to pay higher interest rates, and there may be additional terms and conditions. For example, your loan may need to be secured against the value of an asset, such as your car or equity in your home.

To find out what lenders will borrow to people with below average credit scores, visit our personal loan marketplace. When you input your details, our marketplace will show you loans you might be eligible for, and your chance of approval.

How to apply for a personal loan as a single mother:

  • Check your credit score – Most credit reporting agencies let Australians check their credit report for free once per year. If there are any errors on the report, you can look into getting them fixed to help improve your credit score.
  • Compare personal loans – remember that the cheapest personal loan isn’t always the best option for your finances. Consider the features and benefits of each offer compared to their fees and interest charges.
  • Check you fulfil the personal loan criteria – Many personal loans require you to be over 18, be a permanent resident, meet minimum income requirements and have a good credit rating.
  • Contact the lender – If you have any questions or concerns about a personal loan, consider getting in touch with the lender before making an application, to hopefully avoid being rejected.
  • Prepare your documents – Depending on the lender and personal loan, you may need to provide proof of identity, proof of income/savings, and details of other loans.
  • Complete your application – Many lenders let you apply for a personal loan online, or you can fill in a form in person at a branch.
  • Wait for your results/money – Your personal loan application could be approved in less than an hour, or by the next business day. You may also receive your money on the same day, or have to wait a few days, depending on your lender.

What should you do if a personal loan application is rejected?

Single mums whose personal loan applications are rejected may feel like they should apply with another lender straight away, but there are risks involved with this plan. A loan rejection on your recent credit history could lead to your next application also being rejected, further hurting your credit score.

If you’re rejected for a personal loan, it may be worth considering spending a few months clearing other debts and keeping up to date with your bills if possible, to help your credit score recover and hopefully lessen the likelihood of your future personal loan applications being rejected.

Are there emergency loans for single mothers?

If you’re a single mum doing it tough, and are having trouble being approved for a personal loan, there may be emergency loan options available with no interest charges.

The No Interest Loans Scheme (NILS) from Good Shepherd Microfinance is available for low-income borrowers needing to pay for essential household goods and services, such as fridges, washing machines and medical procedures.

Other low-interest loan options are available from different lenders. If you’re not sure of the best place to start, consider contacting a financial counsellor, or calling the national debt helpline.

Can single mothers on Centrelink get personal loans?

Unemployed single mothers on Centrelink benefits may find it more difficult to successfully apply for personal loans. This is because before many lenders will approve your application for a personal loan, they will want to know you can afford the repayments on the income from your job without ending up in financial stress. Many lenders won’t include Centrelink payments when assessing a borrower’s income for this purpose. 

Even if you’re a single mother with a part-time or casual job, or if you’re a self-employed single mother, if more than 50% of your income comes from a Centrelink benefits or a pension, there may be fewer lenders out there willing to lend to you.

Some lenders do offer personal loans for borrowers on Centrelink, though you may need to pay a higher interest rate than other borrowers. It’s often worth contacting a lender before applying for a personal loan to check if your Centrelink payments would likely affect your application’s success.

At the end of the day, having bad credit can make it difficult to borrow money but there are options out there. For more information on how to borrow money with bad credit, including information about bad credit home loans, car loans and credit cards, visit our bad credit hub to help find the right financial option for you.

Frequently asked questions

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments.

If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan options. Consider contacting the lender before applying.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

What do single mothers need to apply for a personal loan?

Like other personal loan applicants, single mothers will likely need to provide a few documents to any potential lender, such as personal identification, bank statements (savings, loans, credit cards), proof of address, and proof of income (payslips, tax returns).

Can I include my spouse’s income on a personal loan?

If you apply for a joint personal loan with your spouse, you can include their income on the application. If approved, they then become jointly liable for the loan.

Both you and your spouse need to meet the eligibility criteria, such as income, age, and residency requirements, as stipulated by the lender. A joint loan could increase your chance of approval for a higher amount, as both borrowers’ incomes are assessed when determining borrowing capacity. 

Can single mothers get personal loans online?

Many lenders offer online applications for personal loans, which can be convenient for borrowers who have busy lives. If you’re not confident your personal loan application will be approved, you may want to consider contacting the lender by email, live chat, phone, or by visiting a branch, to discuss your situation before applying.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Can I get guaranteed approval for a bad credit personal loan?

Few, if any, lenders would be willing to give guaranteed approval for a bad credit personal loan. Borrowers with bad credit histories can have more complicated financial circumstances than other borrowers, so lenders will want time to study your application. 

It’s all about risk. When someone applies for a personal loan, the lender evaluates how likely that borrower would be to repay the money. Lenders are more willing to give personal loans to borrowers with good credit than bad credit because there’s a higher likelihood that the personal loan will be repaid. 

So a borrower with good credit is more likely to have a loan approved and to be approved faster, while a borrower with bad credit is less likely to have a loan approved and, if they are approved, may be approved slower.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

Are there emergency loans with no credit checks?

While many personal loans require a credit check as part of the application process, some personal loans and payday loans have no credit checks, which may appeal to some borrowers with a bad credit score.

Keep in mind that even if a loan is available with no credit check, the lender will likely want to confirm that you can afford the repayments on your current income.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Can I get a self-employed personal loan with bad credit?

It may be much more difficult for a self-employed borrower to successfully apply for a personal loan if they also have bad credit. Many lenders already consider self-employed borrowers to be riskier than those in full-time employment, so some self-employed personal loans require borrowers to have excellent credit.

If you’re a self-employed borrower with a bad credit history, there may still be personal loan options available to you, such as securing your personal loan against a vehicle of equity in a property, though your interest rates may be higher than those of other borrowers. Consider contacting a lender before applying to discuss your options.

What are the pros and cons of bad credit personal loans?

In some instances, bad credit personal loans can help people with bad credit history to consolidate their debts, which can help make it easier for them to clear those debts. This is because the borrower might be able to consolidate several debts with higher interest rates (such as credit card loans) into one single debt with a lower interest rate and potentially fewer fees.

However, this strategy can backfire if the borrower spends the loaned funds instead of using it to repay the new loan. Another disadvantage of bad credit personal loans is that they have higher interest rates than regular personal loans.

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

Can students with no credit history get loans?

It is possible for students with no available history of borrowing or managing money to get a personal loan, though it may be more difficult as well as expensive than for borrowers with a good credit history.

Having no credit history means having no credit score. While many lenders may consider having no credit score to be better than having a bad credit score, they may still consider it riskier to lend to an unknown borrower and may charge higher interest rates or fees than to borrowers with good credit scores.

Do $4000 loans have no credit checks?

Many medium amount loans for $4000 have no credit checks and are instead assessed based on your current ability to repay the loan, rather than by looking at your credit history. While these loans can appear attractive to bad credit borrowers, it’s important to remember that they often have high fees and can be costlier than other options.

Personal loans for $4000 are more likely to have longer loan terms and will require a credit check as part of the application process. Bad credit borrowers may see their $4000 loan applications declined or have to pay higher interest rates than good credit borrowers.

What do credit scores have to do with personal loan interest rates?

There is a strong link between credit scores and personal loan interest rates because many lenders use credit scores to help decide what interest rates to offer to potential borrowers.

If you have a higher credit score, lenders will probably classify you as a lower-risk borrower. That means they’ll be keen to win your business, so they may offer you a lower interest rate if you apply for a personal loan.

If you have a lower credit score, lenders will probably classify you as a higher-risk borrower. That means they might be concerned about you defaulting on the loan and costing them money. As a result, they might protect themselves by charging you a higher interest rate.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.