Getting a loan during the recession may not sound like a good idea at the moment, but if it’s your only choice you may want to read this up.
A great recession is felt all over the world today, in the U.S. inflation is as high as 9.1%, in the Philippines inflation reached 6.4%, in Europe, it’s 9,1%. This is caused by the ripple effects of the Covid-19 pandemic which everyone hasn’t bounced back yet and the effects of the Ukraine / Russia War. During the pandemic, it was because of the lack of supply, now it is because of the higher cost of everything.
This means even if we have saved up money from the pandemic or whatever sources, the purchasing power of our money decreases. It’s like your $100 is just worth $10 purchases now. Or like if you can get out of a grocery with 15 items in your cart then, now you will just go out with 5 items with the same budget you used to have.
With very little money everyone with most just enough to cover our basic needs, mostly food, is it wise to consider getting a loan right now?
Honestly, I have nothing against incurring loans as long as you have the discipline to pay up on time and not incur more loans than you can ever pay. Big business people secure loans so they can play with the money they have and improve their business.
There are a lot of lending institutions eager to lend money like banks, credit unions, or direct lenders. Just be extra careful before signing up for any loan product because there could be hidden charges and many more you didn’t see. Do your research and compare before you get the loan you need or want.
Getting a loan during a recession may be a bit more difficult but sometimes it is the only option. Especially those who are hit by the pandemic really hard and still struggling. If in the past you have a good credit score and you are consistent in your payments in your past loans, it will be easier for you to secure a loan. It won’t be a problem finding a place to lend money.
The key factor here is just make sure when you sign up for a loan product to stay consistent with your payment, so in the future, you may find it easier to get approved for better loans and an increase in your credit score!
But even before thinking of signing up for a loan, think a hundred times if you need it or just want it. Need means you will not survive if you don’t get it. Want is just a luxury or something good to have but not necessarily.
Before getting a loan make sure you have an expected source of income to pay it back. If you do make use of these tips pay off your loans during a recession:
What's Inside
Pay more than just the minimum monthly payment.
This will have you save money on interest rates and will put you ahead of your original payback schedule.
Don’t Take Up More Credit until you’re done with the first.
Don’t get sucked into debt and sacrifice more of your future income to pay up loans. Don’t take more loans than you need.
Sign Up for Automatic Payments
If you have a regular income stream and a regular amount of money expected to come into your bank account you might want to consider putting up automatic payments so you won’t forget or miss out on payment and incur late charges.
If there is an option to Refinance and Consolidate your debts
By doing so you may get low interest rates, a new payback schedule, a higher loan amount, and decreased monthly payments.
You may want to visit this site to see your options in getting a loan during the recession.
Good luck and hang in there!