Is It Practical to Take Out a Personal Loan Amid COVID-19?

November 19, 2020
Personal Loan

As the Coronavirus pandemic continues to make its presence known in South Africa’s different districts and cities, many of the country’s citizens are now facing a pressing health scare. 

With lockdown restrictions in place and barriers to entry being enforced in immigration systems, times have become tough for the economy and government in more ways than expected. For any cost-conscious South African looking to take care of their finances amid this pandemic, the current situation that lies ahead can prove to be especially challenging! 

Currently, you might be wondering about all the different tasks that you’ll need to handle as you grow more acquainted with the effects of the current pandemic. From health-related matters to the possibility of attaining insurance, the number of different matters that have to be handled is quite plentiful.

Among the different concerns that you’ll need to handle (and the additional matters that are bound to arise), there’s one question that you might ask yourself: “Can a personal loan help me during a crisis like this?”

Can personal loans really help?

Considering that South Africa’s economy is facing a formidable challenge and businesses all across the country are facing tough budget cuts, it may be safe to say that you’re facing a sticky financial situation yourself. 

Before the pandemic, thinking about taking out a personal loan was a mere matter of deciding on which lender had the lowest interest rates and offered smoother processes. In times like these, where incomes are far less steady, and firms are tightening their qualification terms, personal loans are less of a commodity, which makes it a tad bit harder to get assistance.

Taking all the different factors into consideration, it’s safe to say that the idea of getting a personal loan can either be smart or just plain wrong, depending on the situation at hand.

Factors affecting your loan decision

Generally, taking out a loan in a crisis like this can pan out in different ways depending on what financial situation or predicament is involved. If you’ve been debating over whether or not it’s time to seek financial assistance through a personal loan from an esteemed lender like Hoopla Loans, here are the two factors you’ll need to consider: 

Factor #1: Your current list of dues or payables

Being on the brink of a financial crisis and experiencing a difficult time with paying off expenses can seem like a reason to take out a personal loan. However, in most cases, such extreme measures aren’t necessarily needed. Unless you have a sudden medical emergency or don’t have a job but have a pile of past dues to be settled, it may be wise to save a personal loan for a rainy day instead!

Factor #2: Your debt-to-income ratio

Defined as the ratio of present debts and regular income, a debt-to-income (DTI) ratio is a factor that all lenders seek the most when evaluating loans. However, your ratio is also something you should take into mind when evaluating the need to take out a personal loan. 

While the figures may differ from person to person, best practice dictates that personal loans should only be attained with a DTI that’s between 25 to 40 percent. A ratio higher than this range must then be remedied with a longer-term loan. Conversely, a ratio that is lower than 25 percent won’t need to be supplemented by a personal loan. 


In a time like this where COVID-19 is more rampant than ever, it can be quite pressing to consider the idea of taking out a personal loan. Yet, it’s worth noting that it’s best to simmer down and rationalize before applying. Through this guide’s help, you can help ensure that you won’t end up running into a situation where you don’t actually need a personal loan or have extra debt from something that isn’t enough to meet your needs. 

We’re an online loan provider in South Africa that offers personal loans for those needing a credit score boost with a quick and easy process. Visit our website to apply for a loan today!