6 Types Of Loans To Take During Covid-19
As the coronavirus pandemic continues to impact the global economy, more people than ever before are struggling financially.
Many workers have either lost hours or have lost their jobs altogether. Those who are fortunate enough to have stayed employed are also experiencing their share of financial hardships.
Obtaining a loan could be a sensible or necessary way to help you weather this storm. Keep reading to learn about the different loan options available to you.
Understanding Your Needs And Assets
In this uncertain climate, it’s prudent to undertake a financial inventory so you can best access how to get by. This goes beyond basic accounting where typically income is weighed against outgoings.
Only once this is done, can you properly gauge your financial health and plan accordingly for the months ahead. It’ll help you determine whether a loan is required and the amount needed if so. If a traditional personal loan isn’t possible or desirable, then it’ll also reveal what other assets you have at your disposal.
Loans that are based on home collateral are secured loans that grant the lender the assurance that it’ll be repaid. Should repayments stop, a lender can foreclose on the home. Having this assurance in place usually means good terms are available for a loan. Such loans come with more favorable interest rates and tenures that can extend up to 20 years. Good credit history is also less of a prerequisite.
However, for the borrower, this type of loan can be risky because it puts their ownership of a property on the line. A homeowner needs to carefully consider both the pros and cons before pursuing such a loan.
Gold And Jewellery Loans
It’s usually never advisable to cash in on items that hold as much sentimental value as jewelry does. During the tough times, gold and jewelry can often be a practical source for speedy funding.
Disbursement of gold loans can often be finalized within just a few hours, with a good percentage of the gold’s value transferred to a cash sum. Interest rates start from around 9%.
Often there’s no early redemption or exit fee, should the loan be redeemed before the end of an agreed loan term.
Top Up Home Loans
A top-up loan is a provision provided by banks and other credit facilities that affords you the option of borrowing money over and above your home loan. Topping up a balance on a mobile phone is a common practice. The same principle can be applied to homes.
These loans usually run for the same period of the existing home loan but sometimes may only extend up to ten years.
Interest rates that are applicable to top-up loans may be slightly higher than what was originally agreed for your home loan. Although, they’re still usually cheaper than a standard personal loan.
Credit Card Loans
For those already in possession of a credit card, it’s possible to seek out a loan on an existing account. This amount can be above the pre-approved credit limit.
Alternatively, with the wealth of introductory offers and one-time bonuses that are typically offered to new customers, it’s perhaps more shrewd to take advantage of these.
Applicants with healthy credit can commonly be offered 0% interest for an opening duration and even be gifted a cash sum as an inducement to spend.
For what is hopefully a temporary situation, a credit card is a viable option.
Covid-19 Personal Loans
In these difficult times, banks and other financial institutions have been keen to show their caring side. One very useful example is the introduction of COVID-specific loans, made available to existing customers who boast a reliable credit history.
Not all banks do this, so it’s advised that you first check if yours does off this. If your bank does and you’re eligible, then a personal loan with a lower interest rate could be on the table.
Specially extended tenures that exceed the standard three years are obtainable with a suspension period on repayments.
If your bank doesn’t have a tailored Covid-19 loan available then it’ll almost certainly have an unsecured loan available to you. Such loans can be agreed upon with the minimum fuss and no collateral.
Interest rates will vary considerably depending on your circumstance, credit history, income, and job security.
Even with no credit footprint, it’s possible with some banks to secure a pre-approved loan.