The cruelty of life can dare people with nothing to lose to do things that leaves them with nothing afterwards. Desperate people do desperate things. It’s better to think about the best loan options available to you according to your circumstances instead of applying to the first one you come across.
Don’t dig yourself a deeper financial hole than the one you’re already in.
I know it’s bad.
Over 10 million Americans applied for unemployment in the last weeks of March 2020. Millions more will apply for unemployment before this year is over.
The unemployment rate is probably over 13% right now and will definitely be higher before 2020 is over. Its was under 4% before COVID-19 appeared.
2020 belongs to COVID-19, also known as the coronavirus. There is no debate about that.
However, you need to stay optimistic and consider your options.
Your best loan options may not have materialized yet.
After all, COVID-19 is changing local, regional, national, international, and global economies, and how they operate, right before our eyes.
You may need to apply for a loan. Here are your best loan options, some tips, and loan options to avoid.
U.S. Bank
U.S. Bank was founded as a small, local bank in Cincinnati, Ohio in 1863.
It’s the 5th largest financial institution in the United States and transacts over half a billion of financial assets annually.
The U.S. Bank Simple Loan program offer an affordable, short-term loan that could be helpful to cash-strapped people.
You can apply for the U.S. Bank Simple loan program and get $1,000 that must be repaid within 3 months.
Federal or State Chartered Credit Unions
A credit union is a member-owned financial institution that serves its local demographic.
Most banks are owned by domestic or international corporate parent companies.
A credit union must think locally about the interests of its members.
Traditional banks must think regionally, nationally, and globally about tis financial interests.
You are more likely to get a lower interest rate at a credit union. There are two kinds of credit unions – a state or federally chartered credit union.
The only difference is the operational guidelines which differ state-to-state or on a federal level.
When you join a credit union, you essentially become a member of it and not just an account holder.
You may have to live in a specific area or work for specific businesses to join a credit union.
Inquire about the application process and your chances for approval before applying.
One of Your Best Loan Options Might be a Traditional Bank Loan…Soon
Many people will be out of work in the coming years.
It’s almost a certainty that most financial institutions will adapt their business models to accommodate the burgeoning demographic of low-income consumers in every strata of society.
Check out some local banks and inquire about their personal and low-amount loan programs.
Such programs may become more ubiquitous in the coming months.
Still, give yourself options. Only stick to small loans, low-interest loans, and lengthy installment plan loans.
Small Dollar Loans
I understand that money is tight now. However, the last thing you need to do right now is to try borrowing several thousand dollars if you can’t collateralize it or pay it back soon.
Don’t borrow more than $1,000 or $2,000 if you can help it. Why dig yourself a deeper financial hole when you’re already in one?
Worry about your next step when you pay the loan back.
Low Interest
Stick to low-interest loans with rates less than 36%.
The probability of missing a repayment or paying late is not improbable, so why add high interest rates in the mix?
Don’t apply for or accept any loans with interest rates over 36%. You’re just asking for trouble if you incur late payment penalties.
Installment Plan Loans
Many Americans are out of work and many more will lose their jobs before this coronavirus crisis is resolved.
So, it’s understandable that you’ll probably assess your options for loans.
Just apply for loans with installment plans that allow you significant time to pay it back.
Any loan you apply for should have terms that allow you pay it back in incremental installments.
Why?
The last thing you need is to take out a $1,000 loan and then stress over needing to pay it all back within a month.
It will be better for you to pay it back in installment amounts while you look for other work or learn to adjust to telecommuting.
Installment plan loans are one of those best loan options because they allow you to stretch out your savings as well.
These are one of your best loan options right now.
Loans You Must Avoid
The best loan options for you are the ones that don’t leave in worse financial shape than before you applied.
Don’t let despair and desperation inform your choice making.
Stay away from payday loans. These are predatory loans that target working class, low-income, and bad-credit demographics.
Payday loans are simple to apply for. You can apply online and be approved in minutes.
They are offered by private businesses, individuals online and on P2P websites. There are some legitimate payday sites.
However, payday loans have extremely high interest rates. The worse your credit, the higher the rate.
I wouldn’t mess with a car title loan unless you want to gamble with the odds of having your car repossessed. They feature 300% interest on the average usually must be repaid within a month.
The truth of the matter is that your best loan options will reveal themselves in the coming months according to your specific circumstance.
Inquire at your local bank.
Check out every credit union in your area.
You have options. Even in these dark times.
Don’t make desperate decisions that will narrow the few options available to you even more.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.