We are in unprecedented times brought about Covid-19. The first three quarters of the year 2020 were spent mostly at home, as the Philippine government declared lockdowns per city or province. Life is like suspended animation because our tomorrow is not guaranteed. As many people have lost their jobs and business, there’s not a lot of cash flow going around. That is why a personal loan during the pandemic seems very attractive to many. But is it really the solution to our financial problems right now?
Do You Need a Personal Loan During the Pandemic?
In the Philippines, local government units provided relief packs to their constituents in order to get by during the lockdown. Depending on the mayor, families got several kilos of rice, some canned goods, and packs of noodles.
Recipes Using Sardines
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- Spicy Sardine Frittata: 50-peso-Dish for a Family of 5 from Covid-19 Relief Packs
- Sardine Java Rice: A Filipino Family Meal Below P50
Moreover, the national government released stimulus money twice to many Filipino families since the pandemic started. All these are supposed to augment the family income and help people get by during these difficult times.
However, with the loss of income and additional costs like face masks, face shields, and higher transportation costs, all these government support is not enough.
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But when there are big expenditures like enrolment and sickness, a personal loan during the pandemic is like the go-to solution. It seems like the easiest way to get by in this global economic crisis.
What is a Personal Loan?
A personal loan allows you to borrow money from a lender that you can use to spend for yourself or your family’s needs.
While most personal loans may be used for any expense, some lenders offer specific personal loans that come with specific terms for the purpose of debt consolidation.
While mortgage loans and auto loans are used for the purposed with which they are named, you have more liberty with a personal loan.
Once the loan is approved, it will only take a little while before you receive the money into your personal bank account. Then you can use the funds to cover your needs, like your children’s enrolment fees, utility bills, or medical expenses.
You can even use the money for travel, like if you are up for a family vacation at this time.
The Pros of a Personal Loan
There are several benefits to taking out a personal loan during the pandemic for whatever reason you need the funds.
Here are some of them:
- Temporarily closing the cash flow gaps quickly
- Helps the borrower to pay off their outstanding debts
- Potential lower interest rates
- Debt consolidation (especially when you have several loans to pay)
- Maximize savings (especially if you are starting a small business)
Many resilient Pinay moms started their small businesses during the pandemic in order to tide the family budget over. Here are some of their inspiring stories:
- Mommy Cleth and her Homemade Kare-Kare with Love
- How a Bacolod Mom Changed the Philippines with Barter
- The Farmtory: Surviving the Lockdown With Tauge
Cons of a Personal Loan During the Pandemic
Personal loans Philippines may not be the best option for your current financial situation.
Here are some things to consider before taking out a personal loan:
- Predatory lending rates (high-interest rates if you have a low credit score)
- Pre-closure charges (additional charges if you decide to pay in advance)
- Potential debt cycle (it might get you keep borrowing to run after expenses)
Personal loans may have lower interest rates but remember, it needs fixed monthly payments as well as a strict repayment schedule. If you are already short on income, this might be a problem for you.
Compare Personal Loan Rates
Before making a decision to borrow money, compare personal loans online. There are many options so you have to study their offers.
Don’t just base your decision on the lowest interest rates.
Make sure to explore your personal loan options by visiting credible sites and compare rates and testimonies about lenders. Or you can go straight to the bank, especially one that has your savings or checking account.
You may also want to compare notes between secure loans and non-collateral loans. These two have different specifications and dynamics in payment.
May God bless us and may the tide turn around in our favor in the coming months. Meanwhile, let’s just survive and cope with this pandemic in the best way we can.