Parents often need a loan not only for the initial equipment of their child, but also for unpredictable expenses. In many families, the income decreases after the birth of a baby because both parents were previously employed. The easiest way to borrow is when consumers start loaning their parents at the beginning of their pregnancy.
In this case, the bank guarantees two repayments of income so that borrowing is easy. Expectant parents choose a long term so that they can pay the monthly installments with a single income. Banks hardly offer discounted loans for parents, they can only be obtained as part of construction financing thanks to municipal support.
Bank loan for parents
Whether the bank approves a loan for parents of older children depends on the income and its calculation method. In order for the household bill to make the payment of the loan installments appear possible, many families rely on including the child benefit in the total income. Most domestic banks take child benefit payments into account when calculating income, while foreign financial institutions with few exceptions do not count any government benefits. In the case of possible secondary earnings, disregarding the household bill is more common than taking it into account, so that families with income from different sources are actively looking for a bank whose credit calculation includes all types of income.
If the income is still not sufficient, the grandparents can act as co-borrowers or as guarantors. Especially in the case of marriage or a cohabitation with a earner, it is advisable that a deserving grandparent should enter the loan agreement as the second customer instead of the partner. Even more than consumers without children, parents are careful not to use the overdraft facility of their checking account or only to use it for a short time. Due to the high debit interest and the compound interest effect, the overdraft facility is not suitable for long-term financing.
The interest on the current account is even higher than with the giro account. If borrowing turns out to be difficult, an intermediary can still get the desired loan for parents in many cases. The service provider has good contacts and represents a high level of buying power. For this reason, financial institutions approve requests submitted through the credit intermediary, even if they would reject the request made directly by the same customer. When choosing an intermediary, parents make sure that they only calculate the allowable success bonus and no upfront costs.
Alternatives to bank credit for parents
Mail order companies usually do not inquire when ordering on an installment basis whether they grant the earmarked loan for parents or for childless customers. Even an income check is only carried out when the amount of the order is high, so that parents themselves make sure that they do not make too many payment obligations. A free installment offered by numerous mail order companies should not lead to a waiver of the price comparison.
The installment surcharges payable by a competitor, combined with a lower selling price, may well result in a cheaper offer. Even with poor creditworthiness, it is easy to apply for a loan for parents on websites for private loan brokerage. The private lenders registered there mainly decide on the intended use for the requested loan and on social criteria, so that they prefer to support families with a quick credit subscription.