Since news broke out that the Covid-19 virus was already taking many people’s lives, governments around the world had to lockdown cities and prohibit mass gathering as preemptive measures to check the spread of this infectious disease. Economic activities were disrupted, and many people lost their jobs.
If you’re one of those struggling financially because of this pandemic, you may think that taking out a personal loan isn’t a good idea. Now, I want you to rethink this option and convince you that a personal loan can help minimize damage to your finances. Read this blog article to learn more.
What is a Personal Loan?
A personal loan is an unsecured loan that you can obtain from credit unions, banks, and online lending companies. Unlike other types of loans that have specific purposes, you can use personal loans for anything.
The money you owe to the lender, along with the interest amount, is paid back in installment payments over a predetermined period. The interest rates of personal loans can go from 6 to 36 percent annual percentage rate (APR).
Reasons to Consider Taking Out a Personal Loan
There’s no better way to convince you than to enumerate to you the reasons why a personal loan can help you ride out the financial difficulties during this crisis. If you’re planning to cover important expenses, consolidate debt, or save some cash, you must consider getting personal loans at Good Cheddar.
Simplify Your Financial Obligations
When you’re unemployed, and bills are still coming your way, you’ll be a lot more stressful than on a regular day. But, with a personal loan, you’ll be able to manage your financial obligations. For instance, you can use it to consolidate your bills to make your life simpler.
Last year, over 137 million American adults reported financial difficulties because of medical expenses, more than 7 million were 90 days or more behind on their car loan payments, and 37 million were 90 days or more late on their credit card payments.
This was all in 2019 when the Covid-19 pandemic was not still ruining our lives. Just imagine how life is now in this so-called ‘new normal’.
So, if you don’t want to get behind your financial obligations and inflict on yourself a higher level of stress later, getting a personal loan is a good option. It enables you to merge your debts into a single bill, and it will save you time and effort because your payment will be deducted from your checking account automatically.
Another great benefit of a personal loan is that you can save money from paying your debts. Let’s now make a scenario for some clarity regarding this matter.
Say, you own two credit cards with high-interest rates (both having a 17 percent interest rate), and your total debt is $10,500. If your monthly payment is $315, you’ll pay back the loan in full for 46 months, and the total interest for this loan will amount to $3,811.
Now, think about getting a $10,500 personal loan to pay off these credit card debts. The personal loan you’ll obtain has a 6 percent interest rate, and you have to pay it in installment payments for 48 months. Every month you’ll only have to pay $247, and your total interest will at the end of the term is only $1,336 (saving you almost $2,500).
In this time of health and financial crisis, you must have enough money to cover your regular expenses and financial obligations. If you don’t have some savings, you can consider taking out a personal loan for that purpose.