Parental allowance is a social benefit, so it is not easy for a bank to get a loan during parental leave. However, if a parent is employed and earns enough money to support the entire family with his or her income, there is little problem in getting a loan. Further information on the topic of credit during parental leave can be read below.
The financial situation during parental leave
If you want to buy a new car or a new device for your home and are on parental leave, you will experience that it is not always easy to get a loan. The amount of the parental allowance corresponds to sixty percent of the last net income paid and is no more than 1,500 USD per month.
Parental allowance is not a seizable income and is paid for a maximum of fourteen months. If the duration of a loan during parental leave matches the period of parental leave, banks are more willing to grant a loan. Furthermore, the chances of getting a loan during parental leave increase if either of them is still employed.
How do you get a loan during parental leave?
A regular income is an option to increase the chance of a loan during parental leave. Another option is a solvent guarantor. If you can show someone to pay their installments in an emergency, there is a greater chance of getting a loan during parental leave.
It is also advantageous if a second person signs the loan agreement so that there are two borrowers in total. In this way, the bank adds up both incomes, that there is a higher income or a higher security against a possible default. If you don’t have a guarantor, you can also try to find a private person who agrees to give you a loan during parental leave.
This private individual can come from their circle of friends or acquaintances, their family or from the Internet. There are various portals on the Internet where private individuals offer private loans. However, you have to reckon with the fact that you will have to pay higher interest rates because the risk of default is very high and nobody is willing to take this risk.
You can also take advantage of your overdraft facility. However, you should not strain your overdraft facility too much because the overdraft interest is very high.
What are the conditions for a loan during parental leave?
Since income during parental leave is much lower, banks tend to give small loans of up to 5,000 USD. The interest is always based on the creditworthiness of the borrower. During parental leave, the creditworthiness is usually low because the income is low, so the interest will also be higher. Think carefully in advance how high the loan amount should be. Use this as a guide for how much money you actually need.