Can Getting a Personal Loan During the Pandemic Help?October 08, 2020
The pandemic has created plenty of problems around the globe. Businesses have slowed down, people have lost their jobs, and entire markets worldwide have come to almost a stand-still. Efforts have been made to let normal business activities regain momentum, but these initiatives will be limited until the threat of the virus is eliminated.
If your finances have taken a hit due to the pandemic, you might be wondering whether a personal loan is a smart idea. Before we answer that, let us first discuss how the pandemic has affected the economy.
Drop in supply
The slowdown of the economy has lowered the demand for certain products, such as mobile phones and the like. However, the pandemic has also produced a shortage of essential goods, such as food and hygiene products. This shortage means that there is not enough to satisfy the current demand, leading to significant price increases for typically affordable goods. Over an extended period, this rise in basic commodities can be a real threat to a person’s finances.
Fall of stock prices
Banks utilize stocks as one of their income sources. While this is generally regulated for safety concerns, it is one way they get money to repay their depositors. However, with the fall of stock prices, banks are at risk of working with much less capital. This means there is a chance that some banks may not have the money to repay depositors and be unable to provide loans to the population.
Rise in unemployment
With the drop in people’s spending and the overall slowdown of markets, businesses have been forced to take action to survive. Unfortunately, one of the ways they do this is to lay off their workers. This means that unemployment rates have increased significantly, meaning fewer people are employed and making any money. There is a dangerous side effect to this, a reduction in disposable income. With less money circulating overall, entire economies slow down significantly.
Less personal income
Personal income takes a significant hit from the pandemic. As previously mentioned, the chances of ending up unemployed have risen significantly, meaning that many people stand to lose their source of personal income. This has forced many people to use their money sparingly and even look for other methods of gaining more money, such as personal loans.
When you consider that the economy has slowed down significantly, would it be a smart idea to still opt for a personal loan?
The short answer is yes! That is because when you borrow money, you end up spending that money, which then enters the market, helps businesses survive, and boosts employment and growth. In other words, when you borrow money to spend, you are doing the economy a favor.
That being said, we highly recommend opting for bad credit loans if your other option is a credit card. That is because bad credit loans generally have much lower interest rates. Plus, if you already have bad credit, this would be the type of loan that would be available to you.
Finally, remember to be smart about your loans. Do some research and make sure you will be able to repay them later on.
Hoopla Loans is South Africa’s online brokers, offering various loans online through loan application systems. If you are looking for quick loans for bad credit, get your loan from us today!