Emergency loans for single mothers

‘Loans for Single Mothers.’ This is a phrase I’ve seen tossed around the web, in searches, and as various website pages as the titles. The promise of course in this title is that there are special loans just for single moms

In fact…there are not.

To get a loan you have to go through the same process as every other person. Yes, there are some loans offered by credit unions or backed by the government that are easier to get for lower income households with bad or no credit history, but for the most part, there are no special ‘single mom loans’ out there for you.

Sorry to break the bad new too you. If you find a website or webpage promising you these special loans, it’s a predatory Payday Loan company who’s offering you a no credit check loan cash advance.

The thing is, you really really want to avoid these cash advance companies.

Avoid Payday Loans

What we can tell you is to AVOID PAYDAY LOANS like the plague. These are some of the most popular loans simply because they are usually only a few hundred dollars and extremely easy to take out – there is no credit check requirement. The problem is the interest rates are extremely high.

For example, a traditional loan might have a yearly interest rate between 13 to 23 percent (this can change depending on the country, the lender, the type of loan, the payment length, and your credit score). A credit card may have an interest rate of 35 percent. A payday loan can have interest rates between 300 percent and 900 percent.

Not to mention a number of other payday loan imposed fees (you are charged a flat financing fee to ‘borrow’ which may or not scale depending on the amount you take out) and the short repayment schedule (sometimes only two weeks before interest rates kick in).

10 Payday Loan Alternatives for Single Moms

• Borrow Money: if you can, borrow money from friend or family.
• Employer Paycheck Advance: ask your employer for an advance on your paycheck
• Credit Union Stretch Pay Loans: small loans with no credit check with much better interest rates than payday loans
• Credit Union Salary Advance Loans: a loan taken out against your upcoming paycheck. Low interest rates, and little credit required.
• Bank Overdraft: depending on your bank account, it’s possible to go into overdraft where you can dip below a 0 balance. This basically uses your bank account as a small line of credit. You will be charged a fee for this (usually 20-35 dollars) and pay interest on the amount borrowed every month. Not a good idea because of the fee, but it”s better than a payday loan.
• Short Term Bank Loans: A number of banks have made payday loan alternatives. You have better consumer protection, lower interest rates, and like payday loans, they are easy to take out. There are even some government backed loans just for low income households such as the FDIC Small Dollar Loans.
• Credit Card Cash Advance: You can use your credit card as a line of credit by taking out a cash advance on it. You will pay a fee for withdrawing cash, however, and you will pay interest on the amount taken out. There are better ‘loans’ to take out, but if you need emergency cash, this is better than a payday lender.
• Interest Free Loans from Non Profits: there are a few organizations who offer no-interest loans to needy households. These are a sort of charity loan in a way. Some religious non-profit institutions offer them.
• Peer to Peer Loans: a new loan product where you borrow from a community of lenders, not a central bank. Usually easier to get these loans with better interest rates. This all depends on what you will use the loan for, however.
• Federal Student Loans: One area where being lower income household (such a struggle single mom) can get you a good deal on loans are federal student loans. You can apply for student loans via the FAFSA application. Once you apply, you will considered for the Perkins and Stafford federal student loans which are backed by the government. As such, you don’t need to have good credit history to be given the loan and IF your household income is below a certain threshold, you won’t pay any interest for the duration of your studies. If you are going to take out a loan, student loans are the best sort because you are using that borrowed money to get an education, learn new skills, and give yourself vastly improved earning potential once you graduate.

Interesting facts

• Tommy A. Moore, Jr., is a co-founder of First Investors Financial Services Group, Inc. ("FIFSG"), a financial services corporation founded in 1989 and located in Houston, Texas. Since 1989, Mr. Moore currently has served as the President, Chief Executive Officer and as a director of FIFSG. Mr. Moore was elected to the additional position of...