- May 23, 2020
Times are tough.
People are going haywire because of lack of certainty there and the absence of income earning capacity.
People world over are suffering a lot due to this dangerous pandemic Coronavirus. Lockdown condition for incessant time has compelled the economy into a tumbling percentage.
Daily and other sources of earnings of people are hampered tremendously. Precautions for people to stay at home have awakened new monetary problems.
Savings in their bank accounts have gone zero and nothing much is there for meeting any emergency.
Paralyzed is the word that can be termed for the world economy due to this Covid-19 meltdown.
Many are trying to keep up with rental payments, while some others are themselves threat related to life due to this virus. People through borrowings are meeting hospitalisation and other virus treatment expenses.
Nevertheless, their savings are not enough to recapitulate through this dark time.
Much more time is necessary for the economy to open through without the scare of the further spread of this virus.
Therefore, many people are making ample use of various kinds of credit, like credit cards and personal loans. Besides, quick loans for bad credit from online lenders are very helpful in meeting the emergency funds gap.
People marred by the low credit score in their credit reports are also eligible to gain credit through this loan product.
Once the application is cleared of the initial credit check, the loan amount disbursement is done instantly without wasting time. The loan amount gets credit ted to the bank account of the borrower within a few hours or at the most the very same day itself, without any delay.
Sometimes people fall in the trap of not knowing which type of loan is relevant and useful for them.
People not having decent credit scores have to face the adverse impact of getting a rate of interest for their loan at a higher APR rate.
None of the financial institutions offers to take the risk of financing to anyone who has a default history of repayments without a cost.
The lenders require some compensatory amount as they are betting on a deal with probability.
GETTING THE BEST LOAN DEAL
It makes the borrowers’ task of getting a perfect loan product for themselves difficult.
Low credit induced high APR and other factors like the principal loan amount, time duration, type of instalments.
Make this whole proposition very costly affair. The very financial capacity and affordability of the borrower gets questioned.
Thus, gaining the most affordable deal is a difficult task in itself.
What the borrowers can do is that they can approach many types of lender, with or without brokers. The ones who offer the most realistic and affordable forms the loan availed.
It would let anyone save on unnecessary prolonged credit payment amounts.
POSSIBILITY OF IMPROVING CREDIT SCORE
The borrowers, through timely repayment of loans, can gain the invaluable opportunity of improving their credit report.
The depiction of the timely repayments on their credit report can enable them to gain the right loan product in future.
This loan taken afterwards need not be of a higher APR percentage as their scope of creditworthiness is improving.
The credit records will get updated for loan companies to offer the most affordable and pocket-friendly loan options in the future.
IMPACT OF REPAYMENT HOLIDAY
The recent efforts by the Financial Control Authority of the UK for relieving the stress of loan takers are well-timed.
As the overall economy is on standstill mode, this three months loan repayment holidays are quite relieving for people.
People have the option to defer their repayment instalments or get their loan amount reduced substantially.
Whatever be the case, an application for the same will have to be given to the respective lenders with whom the loan had been disbursed. However, many people are turning a blind eye to a grave problem in this.
It’s good that many lenders, in lieu of the circumstances are sanctioning such applications vastly. The option for this repayment holiday comes with increased payments on the rate of interests.
The time till the closure of this repayment period is extended through this process.
For instance loan transaction which was due in three years, now due to this repayment holiday gets extended to 3.5 years approx.
So even for the whole extended time, a rate of interest is to be borne by the borrower.
Especially for the person with low credit scores, the already highest rate of APR burden gets increased exponentially.
UNEMPLOYED AND LOANS
Many reputed financial companies are starting to offer loans for the unemployed.
People might have left their jobs for starting a new venture, or some of them may have lost it owing to this pandemic. Whatever may be so, the hearts of lenders are wide open for such people.
All that the borrowers will have to provide is of the proof of any source of income. It can be in the form of documents of receipts of any benefits from the Government that they may be getting, like disability or unemployment benefits, and children allowance. Moreover, the receipt of these benefits should be stable to offer as a guarantee for future timely repayments.