Whether you lost your job because it wasn’t ‘essential,’ or you are otherwise struggling to make ends meet, there is hope. Though the government helped with the stimulus going directly into Americans’ bank accounts, that one-time payment didn’t do much for most people. Still, some options can help when you know what to do.
1.How Can You Get Cash Now?
When your checking account is lacking funds, you need to get cash now. There are multiple ways to do that, such as taking out personal loans and using your house to help you. However, most people don’t think about low-interest credit cards.
These cards don’t charge you a high APR, which means paying them off faster. You use the card like you do money or debit, and you pay the bill off when it comes due at the end of the month. If you can’t pay the entire amount off, it’s possible to make payments, but some of the money goes toward the principal while the rest goes toward interest. Since these have low interest rates, more of the bill gets paid off on time.
Often, though, people with bad credit can’t get these cards. If you’re struggling right now to pay off credit card debt, consider debt consolidation. Many companies do this, and it allows you to take all of your debts and put it into a lump sum. Then, you pay a single bill each month. Though the amount can be high, it’s usually comparable to what each card’s minimum payment is. You may also have lower interest rates from consolidating the debts into one.
Another option for you is to consider balance transfer credit cards. You take out a credit card with a zero percent interest rate. Then, you transfer your current debt to that card. While you still have to pay them off, you don’t have high interest rates in the bargain. Then, consider using the high-rate cards for everyday expenses, pay them off at the end of the month, or transfer those balances to the no-interest-rate card, too.
2.What Loans Are Available for You Right Now?
If you have decent credit, now might be the time to get a loan. You’ve got many choices, though personal loans are often the best. That way, the money can be used for anything, even everyday expenses. Typically, you can get low interest rates and don’t require any collateral. However, lenders have different eligibility criteria, so you should discuss your needs with them before deciding.
Home loans are another option, but they can only be used to buy a home or remodel a current one. Those who are trying to buy a house during COVID-19 may find that now is the right time. Prices seem to be low, and those selling want to get things done fast.
Most people aren’t aware that they can get tax relief benefits from home loans. If you take out a home equity loan on a house you own, you could deduct up to $100,000 of the interest you paid on that. Plus, it doesn’t matter why you borrowed the money.
Capital appreciation is also a tax relief option. Your home’s value increases, but the gains aren’t taxed at federal level. Therefore, you can exclude the appreciation values (up to $250,000) when figuring up the capital gains for the year.
Those who own a home can also choose a reverse mortgage loan. It allows you to borrow funds with the house being collateral. You still keep the title in your name, but it’s a promise to pay back the loan or allow the lender to foreclose on the home and sell it. Though it’s similar to a traditional mortgage loan, you don’t make any monthly payments. The loan only has to be repaid when you no longer live there. Of course, fees and interest are added to the balance every month, and it grows with time.
You still have to pay your home insurance premiums and property taxes and must use that property as your primary residence. Also, the house has to stay in good condition. Eventually, you have to pay off the loan, or the heirs of your estate do. Usually, this occurs when the house is sold (the lender gets the money).
3.Choosing the Right Loan for You
If you’re thinking of taking out any type of loan, it’s time to focus on credit repair. Check your credit score and credit report to make sure there are no issues. You may have a low score; work on bringing it up to get more favorable terms.
Those who seek a personal loan should consider the lenders in their area and the eligibility requirements. Usually, you need a steady income and a decent credit score. Make sure you’re comparing two or three lenders and focus on interest rates. You want the lowest one possible, but also consider how long you have to pay the loan off.
It’s also a superb idea to ask about additional charges. Most lenders add various fees throughout the life of the loan. This is a common practice, but you want to know about them upfront to avoid confusion later.
For homeowners who want a home loan or home equity loan, you should focus on your credit score, as well. Of course, you can get pre-approved for a mortgage loan. This helps you know how much of a house is affordable. Your primary goal here is to compare interest rates and repayment terms. Home loans usually span decades.
With a home equity loan, the repayment terms are often less, but the interest rates could be high. It all depends on your lender, your credit score, and other factors. Make sure you’re comparing both the terms and rates to get the best deal.
4.Avoid Mistakes that Can Cost a Fortune
Many people have lost a job or got their hours cut because of COVID-19. It’s challenging to make ends meet on a low income (or none), but there are some things to avoid at all costs.
While credit cards can be helpful if you’re strapped for cash right now, you’ve got to pay them back. Debt relief is possible in the form of a debt consolidation loan, but a criterion is that you’re in default. This is added stress for you because the creditors can call you and demand money or threaten you with collections.
A money transfer, either between your accounts or from someone else, could be a great choice. However, make sure that you trust the person sending money or to whom you’re giving it. You also want to shop around to get the best rates and focus on timing. The money isn’t going to do any good if it doesn’t arrive in your account on time. Likewise, there are many scams out there, so you’ve got to be careful.
Though you may not realize it, the worst mistake you could make is by not financial budgeting. Creating a budget helps you see where the money goes versus what comes in. This is often a rude awakening for people, but it’s the best way to understand your financial situation and prepares you to deal with it.
Understanding how you can get money quickly during COVID-19 can help you stay afloat during these uncertain times. However, you need to be careful so that you don’t make your financial situation worse.