Coronavirus: A P2P loan is not always the best alternative
We’re all in this together. But we’re not, not really. Every single one of us is living through a different coronavirus lockdown experience, with different levels of financial security and employment.
Although, as we keep being told, coronavirus does not discriminate, but the coronavirus ‘lock down’ does. Any hint of financial trouble is exacerbated in these trying times.
Leap, as a responsible lender, believes that getting a loan from a P2P lender is not always the best alternative. As financial pressure mounts, getting a loan can impact your financial resilience by leaving you facing a steeper hill to climb after the pandemic.
How Could Coronavirus Affect Your Finances
Your experience of dealing with the coronavirus pandemic will be entirely determined by your financial situation. Unexpected expenses can more easily make or break your finances.
So, whilst the unexpected expense of a broken boiler may be easily swallowed by the money saved by not travelling to office every day by the person on a mortgage delay, that same unexpected payment could put someone who was self-employed and now out of work and on the waiting list for Universal Credit, on the street.
Perhaps it’s not so extreme.
Perhaps it’s not having the privilege of being able to keep an entire family fed, home-schooled, medicated and entertained during a ‘lockdown’. One family may be able to keep their kids entertained with the latest games console or a new bike or a laptop - but these are still a privilege
So, during such an extraordinary period of time, how can you pay for unexpected or additional expenses?
When Should You Rely On Credit To Pay For Unexpected Expenses?
The government has put a lot of steps in place to help the financially vulnerable during this incredibly turbulent time. But that doesn’t mean that financial aid is instant or applicable to everyone.
If you are waiting on a delayed Universal Credit payment or cannot get access to any of the government initiatives, there are other options available that we will expand on another post.
What To Compare When Taking Out Credit For Unexpected Expenses
Taking out credit for an unexpected expense during the coronavirus lockdown should be considered very carefully. You need to explore and compare the following factors:
- Interest Rates
- Fees and Charges
- Monthly Repayments
- Early Repayment Penalties
As you consider these factors, additional credit can add more pressure to your current and future situation and put you further into the debt spiral.
- Your financial situation will dictate how turbulent your coronavirus lockdown experience will be.
- All unexpected payments will be magnified and have a greater impact on your finances.
- Even with all the government initiatives, not everyone can gain access to the COVID-19 financial support or there may be a delay in payouts.
- A new loan could put additional strain to your finances not only now but also in the future
- We explore alternatives to a P2P loan in our next post.