We live in a tough situations these days because of the pandemic. People lost their jobs, some were probably asked to reduce work hours, and then there are those who are just short of finances because they or a family member was infected by Covid-19. Most likely, the thought of borrowing money comes to mind.
In the early part of 2020, my finances took a hit because my clients had to pause my contracts with them. I have bills to pay and at a certain point I had to borrow money. It was such a difficult decision to make, but I have no choice. I looked at my needs and options for borrowing money.
Places to Borrow Money
Naturally, banks are the first ones that I thought about when borrowing money. They do have different products available such as personal loans and credit cards. But with the amount of money I need, I felt it would be cumbersome to. apply for a bank loan. Aside from having to file documents, the process can take time. I don’t want it.
If you have a credit card, you can actually do a cash advance from your credit limit. Unfortunately for me, my credit is maxed out so taking cash from card is not possible. Plus, I know that the interest rates are high on this kind of transaction.
Pag-Ibig or Social Security Loan
These government institutions can definitely grant an emergency loan. My payments are not up-to-date though so I know that my loan application will not be granted.
Loan from family and friends
If you a family member or friends in good financial standing, you can approach them for a loan. This is of course, will depend on how much you will need. In my case, I felt that my family and friends are not in a capable situation to lend me some money.
There’s a growing number of online lenders. Some of them are from digital banks while others are app-based institutions. Digital banks usually offer higher loan packages. App-based online lenders starts low and would allow you to get higher loans if you have good credit history with them.
I have a good history with one app-based online lender, so I decided that borrowing moey with this institution is the best option for me. It’s fast, easy, and though the fees are little higher, pretty affordable.
In less than 10 minutes, my application was approved. Unfortunately, I ended up defaulting on my payments. I was just fortunate that it happened at the time when banks joined in the government’s call to suspend late payments. It really helped me get by without worrying about late fees. But that experience was a rude awakening.
So before you go ahead and borrow money in times of need, seriously consider what you’re getting into.
When to Borrow Money
You have the money to make monthly payments
I have to admit that when I took out a loan, I was somehow banking on my capability to get a client to replace the ones I lost. I’m an experienced freelancer and reach out and submit proposals on a daily basis hoping to get entrepreneurs’ attention and clinch a deal.
But it was not that easy. The last project I had was in May 2020, and I was only able to start working again in September of the same year. It took four months before I started earning again. In between those months, I would earn some money from blogging. But it was barely enough to cover all my bills and the loan.
If you’re going to make a loan, make sure that you’re not counting chicks until the eggs are hatched.
Loan interest rates are low
I actually took out an online loan, so the rates are higher than the usual. But considering the fast turn-around time of approval, I gave it a go. Fortunately, I never had to take out a loan after.
You have a good credit score
Make sure that you have a good credit rating. That means that all your bills and loans are paid. Otherwise, your loan applications will be rejected.
You have an asset you’re willing to use as a collateral
If you need a huge amount of money, you have a house or car that you can use as collateral, it will help in borrowing money.
I’m just grateful that I didn’t need such a big amount of money at the time that I borrowed money. It would have been a devastating situation. Otherwise, I’d be in huge debt that I may end up still defaulting even if I’m already earning. That would be terrible.
Recently, I learned about an acquaintance having the need to borrow money from different insitutions because of her mother’s illness. And the loan companies are pestering her to pay up. I told her to make some arrangements on payments to allow her to cope with the situation.
If you’re in a lot. of debt, you may look for a service that can help you consolidate all your debts and help you manage everything under one company. I chanced upon a company doing that. For more information, click here.