If you’re having a difficult time due to the COVID-19 crisis, borrowing cash may feel like your last resort. However, it is important to weigh its pros and cons and make sure that is the right one for you, or else you may find yourself in a much more difficult financial situation.
These days, access to funds is scarce, and people tend to resort to high-interest loans. According to the statistics made by the Bank of England, an average of 3 to 4 people within the ages of 25-30, apply for payday loans with an average loan amount of 260 pounds. That said, if you’re experiencing some short-term financial crisis due to the coronavirus pandemic, choosing the right loan deals that fits your financial needs may be the best solution for your prevailing problem.
But what options do you have?
1. Borrow from Friends and Family
Borrowing some cash from your family or friends may be the cheapest way to get immediate cash without having to pay soaring interest fees. However, if you’re in a situation where borrowing money from relatives and friends seem to be not part of your options, then the following option may be helpful for you.
2. Affordable Credit Card Option
Credit cards can come in handy during this coronavirus crisis when used wisely. Currently, interest free type of deals can stretch up to 27 months—which means you have more than two years to repay your debts. But here’s a word of caution, it is important to be always responsible with your credit card spending.
TIP: Try to clear out your balance every month, whilst having 0 per cent interest fee for your due balance.
Compare Credit Cards
- Barclaycard : There is the fee of 3.5 per cent no interest to be paid for 27 months offers 0 per cent balance transfers and purchase sallows 27 months of balance transfers and purchases;
- Sainsbury’s Credit Card: This credit card comes with a 3 per cent transfer fee provide tons of bonus and reward points26 months of 0 per cent fee for balance transfers and purchases;
- Tesco Credit Card: This comes with an interest rate of 39.94 per cent a great option for people with poor credit score.
3. Credit Union Loans
This type of loan allows members to lend one another by pooling their savings in a locally-based organisation. Through this, it provides a low-cost alternative source of money for individuals and businesses.
Interest fees may cary with credit union loans. However, they are capped by the government provisions with an APR amount of 42.6 per cent. Compared to most short-term loan lenders and institutions, this is considered to be quite low.
4. High-cost Credit Loans
If the latter options are not applicable to your financial needs and if your credit rating is low, high-cost credit loans may serve as your final resort.
This type of loan is a quick fix for your immediate cash needs for a couple of days or weeks. However, you should be very careful when borrowing money through this type of loan, because it can be very expensive and may put you in a more difficult financial situation in the long run.
5. Personal Loans
This is a type of unsecured loan, where you can borrow a sum of money from a lender or an institution, and will have to pay it back upon a fixed period of time. Aside from the amount you’ve borrowed, you will be required to pay an additional interest fee.
Compare Personal Loans
- Tesco Bank: This loan has an APR of 3.4 per cent-interest payable amounting to 262.12 pound comes with a monthly repayment of 146.17 pound;
- Clydesdale Bank: This has an APR of 3.5 per cent-interest payable amounting to 270.04 pound comes with a monthly repayment of 146.39 pound;
- Hitachi Personal Finance: This financial product has an APR of 3.5 per cent-interest payable amounting to 270.04 pound comes with a monthly repayment of 146.39 pound.
TIP: Use a loans eligibility calculator to help you find the best loan for your financial needs.
Takeaway
Before you go, here is one mindful tip that may help you: Carefully assess arrangements before entering consider and weigh down your different options only associate with these if you need immediate source of cash. You can’t afford to rush things when it comes to taking loans to cover your expenses.
