There are many of us who will be considering borrowing during these tough times. We are short on funds, and have things to pay for, as always. But whilst the financial world keeps on functioning as always, is it really a good time to be taking on more debt. We look at a key question – is this a good time to borrow?
Banks’ Approach During Pandemic
Banks and other financial institutions continue to offer their products during the pandemic, and for many it is business as usual. Aside from that, they have offered various holidays and relief to existing customers, but will continue to push for new custom too. However, it is thought that banks are more reticent to lend money during troubled financial times. They may well be more tight in their criteria, so keep that in mind if considering credit.
Do Not Make Matters Worse
If you are struggling with debt, and work has been impacted by the pandemic, then the last thing you should be considering is taking on more debt. This is hard for many to accept, naturally. After all, we need money to survive. To pay for life’s essentials. But if the government cannot cover those costs, nor your employer, what can you do? It is a horrible situation to be in, but taking on more debt only makes matters worse. You must only borrow what you know you can afford to repay. Otherwise, a loan is not a sensible option. and you should consider other paths instead.
Is This A Good Time To Borrow? – Consider Other Borrowing Options
If you decide to borrow, then consider all the options that may be available to you. Firstly, can you borrow off friends or family? You may consider this embarrassing, but it will avoid contracts, interest rates and more. And the possibility of your credit rating declining should you struggle to make repayments. you will also probably have more flexibility when shaping those repayments. Alternatively, the government may be able to financially support you via your work situation. There are business grants available for business owners and those that are self-employed. And of course there is the furlough scheme for those whose employers do not have work for right now. See what is out there and explore your options.
Rates
Low rates in recent times are good news for those that want to borrow. If you are going to borrow it is naturally a great advantage to get low, competitive rates on your loan. However there have been plenty of signs this year of rates rising. This is partly if not mostly due to the aforementioned reticence of many lenders to lend. This is because they worry about the ability of borrowers to make repayments on time in these uncertain and troubling times. So it is not the ideal time to take out credit. If you do, do not settle for poor terms and conditions. Walk away if that is what is on offer.
Is This A Good Time To Borrow? – Personal Circumstance
At the end of the day, whether you should be adding to your debt right now is down to personal circumstance. As it always should be. If 2020 has not harmed you financially, then there is no new reason for you not to borrow. But if the year has been kind to you, you shouldn’t need to borrow anyway. Obviously credit such as mortgages is different, as very few can buy a house outright! But for personal, smaller loans, ask yourself why you need to borrow. And be sure that your financial situation is stable, allowing you to make repayments on time.
