The COVID-19 crisis has crippled the economy of the world in the first quarter of 2020. People are running out of jobs and are losing out on income sources. People became forced to take a loan to run their households. The global economy has entered a state of standstill. The governments around the world have announced lockdowns because of the nature of virus transmission. Due to this lock-down, the companies are unable to continue their work. Their employees are suffering from pay cuts and job losses.
The global pandemic has forced the global economy to come to a halt. It is uncertain to predict when things and situations will be normal again for the world. To survive in this COVID-19 crisis times, people have to get a loan just for the sake of surviving. The most important purpose of getting a loan is buying the essentials and paying the bills. Essentials include food, shelter, and clothing. With no active sources of income, the only ray of hope left for people is to get a loan.
Loan management – Moratorium
A recent problem has come up in the news and it is none other than the loan repayments. The COVID-19 crisis came in without a warning and people were unaware of the pandemic. The existing loans such as student loans, credit card bills, personal loans, and home loans have to be paid. The EMIs have their dates set and the bills generate in time. Now, what you can do in this situation?
One of the most important things you can do at this moment is opt-out for the moratorium. Before you take up any extra loan, you can set aside your existing payments for a stipulated duration of time. You need to remember that you have to pay the set-aside amount after the time gap. Think of getting a loan keeping in mind about the moratorium
The cash needs
Now you have set aside your burden of loan and you need not worry about paying them in the next few months. You are now ready to get a loan and meet your expenses. You have additional cash requirements and you need cash in your everyday life. Let us dive into the sources from where you can get a loan in the COVID-19 crisis:
There are several lending startups in the country which offer microloans. These are small companies that are willing to lend money to the needy ones. Their microloans come with a very high-interest rate and are one of the credit options available to you. If you need money urgently, then the money lenders are the ones to get a loan from.
Personal loans – Pre-approved
You can get personal loans which are pre-approved during the COVID-19 crisis. All you need is to have a good credit history to get this type of loan. You can maintain a good credit history by clearing the outstanding bills within the due date. Bills such as credit card dues and EMIs should be paid instantly. The personal loans are available across the marketplaces and are offered directly by banks. The banks transfer the loan amount to the bank accounts. This is a very good option for people who have taken loans in the past and have cleared them.
Mortgage loans are one of the promising loan options for people in the COVID-19 crisis. You can avail of mortgage loans if you have invested in fixed assets and possess a debt-free property. Mortgage loans are offered at attractive interest rates. Your assets become collateral during the sanction of the loan. This is a good option for people who want to take loans against their assets and property.
Financial assets loans
Financial assets such as stocks, mutual funds, and endowment plans can help you to get loans during the COVID-19 crisis. Just like mortgage loans, the financial assets will act as collaterals in this type of loan. You can avail loans against your financial assets and traditional insurance products instead of going for the moneylenders. This is a decent option for people who want to take loans against their assets and property.
The salaried professionals are offered loans as a multiple of 3 to 5 times their monthly salary. This type of loan is also known as overdraft or credit cash lines in the market. The overdraft loan facility has the flexibility to withdraw funds as per your needs. You pay interest only on the utilized amount. You will incur an interest rate of 14% to 21% for each day of usage.
Line of credit
On the other hand, a line of credit is a flexible loan from a bank or financial institution. It is similar to a credit card because it offers you a limited amount of money to borrow. A line of credit is a specified amount of money that you can fetch as needed and then repay immediately after some time.
A line of credit will charge interest as soon as you borrow the money, and it is mandatory that the borrower must seek approval from the bank. A good credit rating can help you fetch instant approval from the bank. This seems to be a good source to get a loan in the COVID-19 crisis.
Family and Relatives
This is the last option for you during tough times. There may come a time when all the possibilities of getting a loan from the above sources become impossible. The only option left with you is the family and your relatives. You need no assets to put against to get a loan. This is a good option because you do not have to worry about the interest rates against your loan.