2020 has concluded, leaving many individuals wondering how stable their income may be in the foreseeable future. As the Covid-19 pandemic continues to disturb the normal operations of businesses from around the world, it is now more difficult than ever to determine if individuals should use the services and products offered by banks or not.
An increasing number of financial analysts and consultants are currently arguing that a global recession is highly probable, however, the new deals offered by banks seem to contradict this theory. All things regarded, a recession is may be near, but this does not mean that it is unsafe or impractical to borrow money from banks. Here are the most advantageous loans to get in 2021.
- Personal Loan
Personal loans have always been an incredibly popular form of debt, and most banks and private lenders offer them all-year-round. Furthermore, the requirements for these are as low as they can get and most individuals will be able to get one regardless of their income level or their credit rating.
One of the main advantages of these is the fact that they do not require collateral, which means that the borrower is not required to secure them against his property. It is also worth mentioning that they have very low-interest rates, making them some of the most affordable loans offered by banks.
As a word of warning, please pay attention to the terms and conditions offered by the lender. Even personal loans may require collateral if they are large enough or if the borrower has a poor repayment history.
- Debt Consolidation Loan
Debt consolidation loans are great to apply for at the beginning of the year, even if it is uncertain how stable the economy will be throughout 2021. Individuals who have created a lot of debt by buying presents or other expensive items during the winter holidays will have noticed that having multiple loans that need to be repaid can be tough. Debt consolidation loans can not only help make the existing debt more affordable, but they also have the benefit of having very long repayment terms (usually of 10-15 years). This makes it possible for lenders to offer extremely small interest rates.
Keep in mind that these are usually secured against the borrower’s property. While missing one or two repayments is not an issue, not paying the money back on time and failing to get an extension may lead to the lender taking possession of your property.
Generally speaking, debt consolidation loans are great, even during a recession, because they are very affordable and can reduce the cost of other types of debt. Even if an individual’s income is reduced for one or two years, once his finances stabilize, he will find it easy to repay the money.
- Short-term Loans
Short-term loans such as payday advances and microloans are useful regardless of the high-interest rates that are attached to them. This is mainly because their short terms and lack of early repayment charges enable borrowers to repay them before their income is affected. However, there is a downside to these transactions, namely the fact that using them too often hurts an individual’s credit score.
This type of loan should, ideally, be used only every couple of months. Those who find themselves requiring additional financing monthly will be better off using online lending services. The companies that offer loans through the Internet do not report the transactions to any credit reporting agency, making them greater for those who need to borrow money every month.
Regardless of which type of loan you are interested in, please remember that you should never borrow money that you cannot repay, or get loans when your income drops. Getting out of debt is a long and difficult process and if your income is reduced, it is better to look for additional ways to earn money, rather than borrow it.