Deciding if a coronavirus hardship loan will help you or hurt you can be a daunting task. Fortunately, this article will help you to arrive at the best decision that you won’t regret.
Coronavirus has been disastrous- making millions of Americans jobless and driving thousands of businesses to losses, hence leaving many people in hardships.
Let’s face the truth; not many Americans can afford to go through the Covid-19 period without finding themselves needing some extra cash. Even when the disease never existed, some people still needed more money to survive.
Fortunately, you can apply for a coronavirus hardship loan at various credit unions and selected banks to help you settle your bills until you get back to your financial stability. When you borrow this money, it’s supposed to carry you over the pandemic and pay it later depending on the lender’s terms and conditions.
You may also be interested in reading Should You Take Out a Student Loan to College Online?
Steps to Decide if the Coronavirus Hardship Loan will Benefit you or not
Most importantly, if you’re determined to secure a coronavirus hardship loan, ensure that you are obtaining it from a reputable institution. It should also come with a fair interest rate and affordable repayment terms. After a successful borrowing, ensure you pay the loan on time.
To arrive at the best decision, ask yourself these four questions.
1. How Will you Repay the Loan?
Many lenders will be compassionate to give you a coronavirus hardship loan. However, even if you’ve come across an excellent lender and you’ve met all the requirements, you should budget on how to use that money wisely and consider how you’ll pay that loan.
It’s worth noting that this hardship loan is a one-time loan for hardships that can call for long-term solutions. The loan can take you through for some months, but what if the pandemic persists? Obviously, joblessness will continue, and you’ll be locked in a place. Consider if you can pay it. If you can’t afford it, avoid it if you want to raise or maintain your credit score.
Otherwise, coronavirus hardship loan will best suit you if you are confident you can generate that fund within the given period. Again, it can be a great deal if you are sure your job will be back on knees within the next few months.
If you take a loan that you can’t pay, you’ll be hurting yourself- the lender will be on your neck and can forward you to the national credit bureaus that’ll damage your credit score. Where will you access another loan if another uncertainty occurs?
2. Have you Verified the Lender?
Your lender can determine if the coronavirus hardship loan will help you or hurt you. So, before applying for the loan, scrutinize the lender.
There have been many cases where lenders brand their products “hardship loan” and air them online as ads. Many unsuspecting people will apply. Those lenders will use a persuasive language to attract you quickly, such as “24hrs approval time” or “fast cash”. Beware of such kind of phrases.
If you had not verified the lender, you could be squeezed in a corner. Some charge very high rates with short pay off schedules. This can be a shock to your life.
The best lender for this type of loan is the one who has a long history of offering affordable loans and high-quality services. To be sure, you can visit the complaints database in the Better Business Bureau and Consumer Financial Protection Bureau to check if the lender is listed there.
Find reviews online to find out how other people are saying about it. You can ask your friends or family members if they might have heard about it or experienced it.
Moreover, check their social media accounts and learn from them. Finally, enquire from the office of the Attorney General if the creditor is registered with the right statement government agencies.
3. Will you Meet the Loan Terms?
Determine how much you can borrow, and the time you should repay the loans. Also important, look at the repayment term, loan’s APR, and other charges. Know whether the interest charged accrues during payment deferral or not.
All the details and information related to the loan should be written clearly in the loan document.
Consumer advocates advise people to shun away from loans with APR more than 36% or repayment schedule of fewer than six months. Those kinds of loans will hurt you instead of helping you.
4. Are you Qualified for the Loan?
Lenders have different requirements. Therefore, read all the eligibility requirements carefully. You can call them and explain your situation and how the coronavirus has damaged your finances.
The type of lender and your situation can determine if you’ll receive the fund. For instance, to apply for a coronavirus hardship loan from a credit union, you must join it first.
Borrowing money is not the only option during financial problems. Financial experts advise that securing a loan should be the last option. Consider other possible ways of funding your situation before applying for a coronavirus hardship loan. Think of a yard sale or pawnshop for things you no longer use. Learn some DIYs or work overtime to heap more dollars.
Feel free to check out How to Calculate Loan Payoff Even If You’re Bad at Math