While most of us are usually prepared for a rainy day, a pandemic is certainly not on anyone’s emergency list. Particularly, the financial crisis that it brought along.
According to a report from the International Monetary Fund, this fiscal year will affect most of the developed and developing countries, alike. Though, the impact would be felt more by the developing countries in the longer run.
If you’ve also been affected by this global crisis, then there’s certainly one thing going around on your mind- seeking financial support. And perhaps, availing of personal loans with fair credit score that you have must be on top of your list. But, are you prepared to reap the benefits of online personal loans? Are you prepared to handle debts, especially when your sources of income are limited?
Nevertheless, here’s a guide to help you understand how you can use personal loans to your benefit and restore your financial status.
First of all, why online personal loans?
Of course, personal loans are a great way to manage and rebuild your finances. Even more so, during this pandemic, when salary cuts and income are pervasive. Not only individuals but huge corporations have also borne the brunt of this economic crisis brought about by the pandemic.
With a quarter-long lockdown and travel restrictions imposed globally, economic activities are more or less unproductive. And this means the banks and financial institutions are also struggling with their funds.
When uncertainty is all that’s prevailing, we recommend not to dig into your savings. Rather, you can take out a personal loan and save your hard-earned money for brighter days.
To put this into perspective, you can plan your budget and monthly advances well in advance. And therefore, avoid future financial troubles. Moreover, most of the personal loans can easily be repaid in customizable installments.
Of course, having to repay all the dues at once and repaying it in equated monthly installments can create a significant difference to your monthly budget.
On the other hand, if you take out your savings, you may end up creating a future financial crisis. With little income and depleting savings, mental as well as financial stress are bound to strike.
Where to apply for a personal loan and how?
Normally, if you reach out to a direct private lender it would require several face-to-face meetings. On top of that, endless formalities that you’d need to fulfill can further stress you up.
Visiting public places, meeting people, and physical contact are some of the things that probably you’d want to avoid during the pandemic.
With most of the day-to-day activities now being conducted digitally, online personal loans also becoming mainstream. You can, in fact, enjoy the peace by availing of a completely contactless loaning process.
There are plenty of online money lenders or better known as fintech companies who can offer you a loan. All you need to do is log into the website, submit your details, and apply for the loan. However, the process is not necessarily a walk in the park.
Look for money lending networks
For starters, you’d need to find a trustworthy lender. Online lending networks are a good place to begin the search for the right lender. The best thing about these networks? Though they do not lend out any loan, but yet they help connect users with the lenders. And along with that, they also offer a comprehensive comparison between every lending option.
Applying with multiple lenders
When you have a really good credit score, availing of a personal loan with lower interest isn’t difficult at all. However, when you have a fair or bad credit score the chances diminish while increasing your due interest rate also.
A rather smarter way out is applying with more than one lender. When you apply for a loan with multiple lenders the chances of receiving the loan, and that too within your budget, are brighter.
Submit through a paperless process
As already mentioned, online personal loans are a completely safe and contactless process. In addition to this, there are no strict guidelines or hard-paper filing requirements for the application.
The complete process takes up to 5 minutes from filling in the details to application and approval. And once your loan application is approved, you can expect to receive the money in the next 24 hours. Thus, simplifying the process along with reducing the disbursal time for applicants.
Read More: What Credit Score Do You Need To Be Approved?
Know how your loan is processed…
Although the sun seems brighter with online personal loans, it would be foolhardy to say that your loan is guaranteed. Even though the lenders do not run stringent credit checks on you, they still need to run some checks.
For example, a private lender may need to know your income and your monthly expenses before approving your loan application.
So, it might be beneficial for you to know how your personal loan is calculated.
Most of the lenders consider your credibility when offering to lend a loan. The reason being, personal loans are usually unsecured loans. And there are higher risks at stake for the lenders.
Usually, the lenders would consider your application for the amount you request and the tenure you’re comfortable with. Based on this, your lender would then calculate your monthly repayments or EMIs.
It is noteworthy that most of the private lenders charge a flat rate of interest. In other words, you’re bound to repay the predecided amount- principal plus interest, no matter what.
On the other hand, if you could find a private lender who can offer you reducing the rate of interest, you may end up paying a lot less. It works like this- the repayment you make actually is reduced from your due principal and the interest is calculated on the remaining principal.
To sum it up…
Online personal loans are really a good decision to tackle your financial problems. All you need to do is be a little vigilant about your interest rate and tenure of the loan. Rest assured, with careful consideration and sustainable planning you can make your way out of this global crisis- both financially and physically.
