Various Options to Borrow Money During the COVID-19 Crisis

Across the globe, the coronavirus pandemic has upended life as we know it. Economies have spiralled, and businesses have halted operations or shut down completely. Salaried professionals in the corporate sector face immense anxiety, as their employers ask them to take pay cuts. Thousands of workers have been furloughed or laid off as well. In such an uncertain climate, it's natural to be worried about your next salary. If you've been asked to take a pay cut, managing your living expenses on a reduced salary is bound to be challenging. There will be times where you'll be short of cash for necessary expenses. Borrowing from friends or family may not be an option, as your peers are worried about their jobs too. In such a scenario, people are increasingly turning towards borrowing instant loans online to get emergency cash quickly. But are instant loan approvals good news? We explore three ways to borrow money in a financial crisis. Read on:

1.Payday Loans

This is a type of cash advance where your lender gives you a small amount of money for a short period. It is an instant loan online that usually comes in a single installment, and the repayment amount is deducted from your bank account in one shot. Though there is no shortage of payday loan providers in India, exercise caution while going for this type of loan. The APR on a payday loan is steep, and there are also other charges you will have to incur. If you can't repay the loan (with interest) on time, the penalties are very high as well.

2.Credit Card Borrowing

This is a way of getting an instant loan if you have a credit card. You usually withdraw cash using your credit card at an ATM. How much you'll be charged for this cash advance depends on the amount you borrow and the bank associated with your card. Taking a cash advance using your credit card is really expensive. The annual percentage rate (APR) can go as high as 50%. Along with this excessive interest rate, the processing fees for withdrawing cash also fall between 2.5-3%. There are several ways you can accumulate interest and fees with a credit card cash advance. So please pay off your credit card balance quickly if you choose to go down this route.

3.Personal Loans

Today, a personal loan is a go-to mode for arranging emergency funds for salaried professionals. Availing of a personal loan is quick and convenient and offers several benefits. For one, they are unsecured loans as they aren't backed by any collateral. Compared to a credit card, the interest rate on a personal loan is quite low. You can also borrow larger amounts, and repay the loan in wallet-friendly EMIs. The monthly EMIs are automatically debited from your account every month, so you don't have to worry about missing a payment. The interest rate you get is based on many factors, such as your credit score, income level, and debt-to-income ratio. In case you don't get approved for a personal loan, you can always enlist a family member as a co-borrower. This will increase your chances of getting a personal loan.

In Conclusion:

As mentioned above, the three points are some avenues you can consider when you want instant loan approval. However, in an environment as uncertain as this, remember to borrow only for urgent financial needs. Otherwise, stay away from debt as much as possible, and concentrate on growing your savings.


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