The Covid-19 pandemic has had a major impact on the economy of countries around the world. In some regions, the spreading of the virus has caused jobs to disappear and income rates to plummet. This, in turn, has pushed many individuals to seek other sources of financing to maintain their lifestyles or just to survive.
Borrowing money via companies like CobraPaydayLoans.co.uk has always been the most popular way to get the money needed to buy premium products and pay monthly expenses such as rent, medical bills, and others. Normally, borrowing money is extremely safe because banks are constantly looking to make their products as accessible as possible. However, these financial products and services are dependent on the state of the economy and on one’s ability to repay the debt. When the country goes through a recession or income rates are reduced, individuals may find themselves unable to repay the money that they’ve borrowed, which can lead to more serious issues.
This having been said, is it safe to borrow money during the pandemic?
Choose the Right Lenders
Deciding which the best lender for your needs is always important. This is the main factor that can make borrowing money safe or dangerous, including during the Covid-19 pandemic.
If you have a stable source of income but need to borrow money regularly, consider getting microloans from online lending companies. Doing so will not affect your credit rating and debt will be affordable, regardless of how often you borrow money. In most cases, if you borrow small amounts of money, the interest rate will not be enough to make the microloan expensive.
Pay Attention to Your Credit Score
The biggest danger of borrowing money, especially during times of economic instability, is not paying attention to your credit score. Every serious financial choice that an individual makes will be recorded in his credit file. This makes it important to never borrow more than what you can afford and to only get a loan when you need it.
One of the main components of an individual’s credit rating is his credit utilisation ratio. This measures how much credit one has access to and how much of it one uses. For example, having multiple credit cards and not using them can hurt your credit rating. Furthermore, lenders look at a potential borrower’s repayment history (which also includes utility bills). Missing payments or consistently making them late will lower your credit rating and determine lenders to offer you less advantageous terms and conditions.
Focus on Short-term Loans or Ones That Are Extremely Affordable
Getting short-term loans is great because it is easy to repay them whenever an individual determines that his income may decrease. Alternatively, you can apply for personal loans that have small interest rates or long terms (longer terms usually means smaller monthly payments). This will ensure that whatever happens, you will still be able to repay the money.
Seek Cosigners for Added Financial Security
It is a common practice for individuals who have low credit scores, or who are unsure if they will be able to repay their money on their own to have their loans cosigned. In most cases, individuals ask family members or close friends to be cosigners, ensuring that if anything happens, their payments will still be made.
It is also important to mention the fact that having a loan cosigned will also ensure that you get better terms and conditions, provided that the cosigner has a better credit rating than you. This may result in a more affordable loan, which is invaluable, especially during the pandemic.