Adaptation – the perfect word to describe how communities, governments and businesses are handling the current COVID-19 pandemic. We are having to change processes in all walks of life, and the personal loan industry is no different.
With just over 80% of the worldwide workforce affected by the outbreak, it is only natural that families will be financially struggling.
If you were planning to apply for credit, you may be wondering how COVID-19 has affected the industry and what personal loan you can get. The specifics may change between countries and finance companies, but there are some common changes you can be almost sure of.
Shortening Loan Periods
With the immediate future of jobs and incomes as vulnerable as they have ever been, many personal loan companies and banks are not offering long-term repayment plans. For example, Online lender Wonga is no longer offering six-month loans – but they are still offering loan periods up to three months.
Reducing loan repayment periods will prevent people from entering into payment plans they may not be able to stick to, in the event that their income is reduced in the coming months – because of COVID-19.
Changes to Proof of Income
Personal loan companies need to be more cautious when offering loans, hence what was mentioned above, but it also means they need to implement stronger verification measures. This means being more meticulous when assessing a credit applicant’s income.
For example, you may not be able to use your bank statement as proof of income any longer. Instead you may need to provide your latest payslips. The reasons for this is to make sure repayments are feasible and to keep those seeking loans safe.
What If You Already Have a Personal Loan?
If you already took out a personal loan before the virus outbreak, you may be wondering what to do. If you are struggling to repay your current loans because of loss of income, it is best to speak directly with your creditor.
Many creditors recognize the economic difficulty during the current period and are helping their customers to make changes to their payment plans. What can be done will depend on your circumstances and your personal loan provider.
To ease financial pressure and help pay back outstanding loans, you may also want to reduce your outgoings. You may be able to do this by:
- Seeking COVID-19 financial support
- Speaking with your mortgage provider or landlord for a payment holiday
- Asking utility providers if support is available
- Adopt the best money saving tips
The Key Takeaway? Communication
If you are planning on applying for a personal loan soon, remember that your options may now be limited, and you may need to provide more in-depth proof of income.
Moreover, communication is the best way to approach your finances in the current period. It can help reduce your outgoings and adapt payment plans for current loans not paid off.