The proportion of single mothers and fathers in Germany continues to increase. Despite strenuous balancing act between full-time job and child care, often not much remains at the end of the month.
Is a loan especially for single parents a cheap alternative to traditional loans?
Studies by the Federal Statistical Office show that in Germany about every fifth family is a single-parent family – and rising. The proportion of single mothers is 90 percent, only about 10 percent of children are cared for by lone fathers.
Without the financial support of a partner with an additional income, it often gets tight with the money at the end of the month. If urgently needed purchases have to be financed by loans, this is not always possible even with low loan amounts.
Higher interest rates for single parent loans
If you have a steady and sufficient income, a single parent loan is as straightforward as any other loan that requires a good credit rating. However, if the family income mainly consists of alimony payments, child benefit and state parental allowance, borrowing is much more difficult.
Here, the single parent loan differs somewhat in form from conventional credit. In general, child support and child benefit are not legally accepted as attachable services by the banks.
Unlike the single parent loan – the borrower’s liquidity is also assessed on the basis of maintenance payments. Nevertheless, banks are at greater risk of default and consumers have a higher interest rate.
In the platform, both banks and private investors lend money to individuals in the form of, for example, credit on loans or other loans. Thus, single-parent borrowers have a greater chance of getting a loan on favorable terms.