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Could a personal loan help you sail through COVID-19?
- Posted on July 09, 2020
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By Ajita Jha
COVID-19 has substantially damaged the economy and forced everyone to re-evaluate their money. Could personal loans prove itself to be an effective tool to help you steer clear of the financial problems? As the entire world is busy fighting the pandemic, it may sound a bit peculiar to think about applying for a personal loan. However, if you had to lose your job or if you want to gear up for the upcoming financial emergency – a personal loan could be the relevant answer.
Why should you apply for a Personal Loan now?
Like millions around the world, if COVID-19 has disrupted your financial life, then a personal loan is worth considering for stabilizing debt, reducing interest rates, and saving money. Let’s find out how a personal loan can help you in these difficult times:
Saves money
The most useful reason behind taking out a personal loan is that it can help you save money. For instance, if you have two credit cards with high-interest rates i.e. 18% and you owe a total of $ 11,000. If you make the minimum payment amounting to $400 every month, it will take you no less than four years to repay the money.
Now, think of a situation when you get a personal loan amounting to $ 11,000 in order to pay-off those two credit cards’ interest. The interest rate on the new loan is 6% with a term of four years. The new monthly payment would reduce to $247. The money you save can be used to boost your emergency funds.
Reduces stress
No one can deny that the stress levels have considerably increased in the times of pandemic so whatever little you do to make your life less complicated can help you tremendously. Regardless of how tricky the situation has turned out, monthly bills are something that you cannot run away from. If you are one of those people who has always made on-time payments and want to continue the same practice, then a personal loan can help. It enables people to combine the debts, making it into one bill that can be later deducted automatically every month from your checking account.
From where to get a personal loan?
Online lenders – through online lenders, you can easily compare loan terms and interest rates from the safety and comfort of your home. Furthermore, the application process is quite simple and the other procedures are faster. Although, it comes with its own limitations, such as if you come across any problem, you will have to step out to get the problem solved in person. However, you can also reach out to your lender via email, call, or messages.
Brick-and-mortar banks- starting with the banks you are already associated with, can be the most reliable option. The established relationship allows you and your bank to be more open and transparent. Your bank will offer the most suitable loan options. Access to recent bank history further helps to make the entire process easy.
Credit Unions- they are known for providing lower interest rates in comparison to brick-and-mortar banks. Moreover, credit unions are operated by people who can help you whenever you find yourself in trouble.
Peer-to-peer lenders- just like online lenders, you can get a loan from peer-to-peer lenders from the internet. People with poor credit score can find this option useful. Though it charges a higher rate of interest than other lending sources.
In what situations should you avoid a personal loan?
There are certain very evident situations when you should not consider applying for a personal loan:
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You have become unemployed and do not know how long will you take to settle down with another stable job after the COVID-19 ban is eased.
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You already have several outstanding debts. In that case, your priority would be to pay off these debts first.
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You do not have a good credit score to be able to get a personal loan at a low-interest rate. A better option would be to working towards increasing the score.
As much as there are impressive benefits of a personal loan, however, it is not the only option available to save money or improve your financial health. If you are someone with good credit, you can also avail 0% interest credit card. To know more about this option in detail, and our quick picks for the best personal loans for 2020 with other updates in the financial world, keep in touch with BankQuality. It keeps you updated and informed on the latest topics. Visit
BankQuality and register now!
Conclusion
If the entire debt situation has kept you awake for nights, whether it is a personal loan, mortgage, credit card, or auto payment- it’s high time that you settle down the situation with prudence and patience. Get in touch with your lender before you miss out on any payment. Your lender may help you by removing fees, marks against your credit, or threats of collection.
COVID-19 has impacted everyone’s lives in some or other way. It would be better to realize that no one is invulnerable. Hence, to effectively overcome the crisis, the focus should be one minimizing the prevailing damage to set the course for a better future. And the best way would be through restructuring the finances.
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