The economy has started shrinking, and with employers starting pay cuts during the pandemic, the stifling effect can be felt across the nation. Humanity is undoubtedly facing an unpredictable crisis. It is necessary to keep your finances in check during such uncertain times.
The current global economic situation is worrisome and many households are now preparing themselves to fight with the deadly coronavirus and with the financial shock that may come their way. The decline in economic activities and rising unemployment doesn’t necessarily mean it’s a recession. Some may be termed as mild recessions as after witnessing such a downturn, the economy revives quickly. It is illegal in the UK to drop the wages without the consent of the employee. However, not giving your consent to the request of your employer may also result in your termination. These are difficult times and losing the job is the last thing we certainly want.
According to the Centre for Economics and Business Research consultancy, households will have £43 bn less cash available for spending on essentials from April to June. Data released by Department for Work and Pensions showed 950,000 people have applied for Universal Credit in the 2nd half of March 2020. Lenders have also toughened their lending criteria to avoid any potential loss. Hence, there are fewer unsecured personal loan options available in the market during COVID-19 pandemic. Apart from improving your chances of borrowing a personal loan, there are a few other things you should take into consideration.
In this article, we will discuss:
- Why fewer loan offers are available?
- How to get your loan application approved?
- Government’s initiatives for businesses
- Tips to protect your finances
Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56. Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.Maximise your options: Compare and apply for loans below with LoanTube
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Norwich Trust
Loan Term
1 -
10 years
4.8/5
Representative APR
31.90%
Minimum Age
21 Years
4.8/5
Norwich Trust
Loan Amount
£4000 -
£20000
Loan Term
1 -
10 years
Representative APR
31.90%
Minimum Age
21 Years
Minimum Income
£2000 per month
Loan Amount
£5000 -
£100000
Evolution Money Loans
Loan Term
1 -
20 years
4.5/5
Representative APR
28.96%
Minimum Age
18 years
4.5/5
Evolution Money Loans
Loan Amount
£5000 -
£100000
Loan Term
1 -
20 years
Representative APR
28.96%
Minimum Age
18 years
Minimum Income
Not mentioned
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£10000
1Plus1 Guarantor Loans
Loan Term
1 -
5 years
4.4/5
Representative APR
39.90%
Minimum Age
18 years
4.4/5
1Plus1 Guarantor Loans
Loan Amount
£1000 -
£10000
Loan Term
1 -
5 years
Representative APR
39.90%
Minimum Age
18 years
Minimum Income
Not mentioned
Why Less Personal Loan Offers are Available in the UK?
- Some of the private lenders and Fintechs have considered not to take any undue risk at this time and for this reason, they have tightened their grip around the rules for lending. Now, they follow a more stringent process to verify a loan application before giving any approval. According to the Which? the rate of interest on short term loans has increased despite a cut in base rate by the Bank of England (BoE). Also, the availability of 0% interest credit cards has plummeted to a 3-year low. Generally, people use such cards and offer to reduce the overall cost of borrowing. The current nationwide lockdown has triggered the reduction in offers and deals on personal loans as well as credit cards. Lenders are evaluating their economic condition due to this global pandemic. Therefore, the availability of unsecured financial products has reduced over the months.
How to Get your Personal Loan Application Approved?
Financial services industry in the United Kingdom is in a painful period. The government is currently working out on the regulatory requirements to help the citizens fight the battle against the coronavirus that has affected 210 countries across the globe. Lending firms have tightfisted the money, the chances of getting your loan application approved become slimmer than ever. Here are a few tips that may help you to get access to funds amidst coronavirus in the UK.
- Search for an FCA Authorised Lender/Broker
Dealing with an FCA authorised credit lender or broker is always recommended. A credit check is sure to be conducted by the lender before approval. NEVER deal with a firm that is not registered by the Financial Conduct Authority to protect yourself from prevalent scams and frauds that are happening online. City of London Police had reported an increase of 400% in scams as a result of coronavirus-related fraud. Beware of clicking or opening any suspicious email as they may contain malware.
- Compare Personal Loans
Ensure to compare personal loans before you make your decision. Different lenders may propose you different interest rates. Loan comparison allows you to save money as you will choose an offer that suits your requirements the best. You can compare unsecured personal loans at real interest rates here. That means the rate you see with us is the rate you get.
- Examine your Application Form
Do not hit the “Submit” button right after you fill-up the loan application form. Take your time and go through the entire application form to check for any errors. If you spot any of them, make changes. Most of the application forms are declined due to such errors. Having an error on your loan application form lowers your chances of being approved.
Financial Initiatives by the Government for the Businesses in the UK Due to Coronavirus
We all are well aware that the pain of this economic injury caused by coronavirus will impact millions of lives. However, the government has taken some excellent measures to help the economy thrive even during a crisis. From granting support to the self-employed individuals to large businesses, Chancellor Rishi Sunak has left no stone unturned to help the economy stay afloat.
- Coronavirus Business Interruption Loan Scheme
This is a financial scheme designed for small and medium scale businesses that are affected by COVID-19. Businesses under this category can access finance up to £5 million if they have an annual turnover of up to £45 million. There are already 40 accredited lenders who are offering these loans and also, the government will provide the lender with 80% guarantee of each of the loan. This will boost the confidence of the lenders and they may not hesitate to help to inject money to the economy.
- Self-employment Income Support Scheme
If you are self-employed, you can gain benefits from this scheme. It allows you to claim a grant worth 80% of your trading profits and that will be taxable. The maximum amount that one can claim is £2,500. Currently, it is available for 3 months but it may be extended. Also, you can claim for Universal Credit. To claim this grant you must submit your Self Assessment tax return for the tax year 2018-19 by 23 April 2020.
- Business Rates Relief for Retail, Hospitality, and Leisure
The government has introduced a scheme under which businesses under the category of retail, hospitality, leisure are excluded from paying business rates for the tax year 2020-21. Your local council will apply for the benefit. You can also choose to estimate discount that you may be eligible for under this scheme by using the business rate calculator.
Tips to Protect your Finances
Financial experts have warned time and again that it is not about the amount of money one has but it is all about the management of that amount of money. You should take control of your money so that you do not face any issues in the future. Here are a few tips that may help you to manage your finances in a systematic and organised approach.
- Create a Spending Plan
Know where your money is going. Keep a track of it so that you do not end up using it on things that you may not need. Creating a monthly budget is the best approach that you can incorporate for shaping up your finances. The expenses have lowered a lot due to the lockdown, however, you need to be particular about your money during these rough times.
- Boost your Savings
Try to build your savings as much as possible to prepare yourself for the future. A sudden loss in employment will trigger a financial shock that may become too difficult for you to handle. Unsubscribe everything that you do not use and start saving now.
- Spot Coronavirus Phishing Scams
Fraudsters have taken the opportunity to strike and loot money from people. National Fraud Intelligence Bureau (NFIB) have reported more than 2000 phishing attempts and 500 coronavirus-related scams in the UK. Such cases have escalated over the few weeks and hence, be aware before clicking on any suspicious link in an email. If you think that you have been sent a phishing email, report it immediately.
Do not apply for multiple personal loans as this may lower your credit score and that in return will impact your future borrowing experience. If you think you need a little extra money and you’re sure about the repayments – go ahead with a personal loan.
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