Coronavirus: Borrowing money during a health pandemic

Coronavirus: Borrowing money during a health pandemic
Written by Inez Miedema
Published on 27th March 2020
Updated on 19th January 2022
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Getting a loan is a big financial decision at any time, but especially due to recent events you need to consider very carefully if you can afford to take out credit. Choose Wisely can help you understand if lenders are willing to lend you money and at what cost. At this point in time we have seen lenders temporarily scale back the amount of new customers they take on, which might mean that no lenders accept your loan application. We will instead show you other products that may be helpful in these challenging times.

Tip: Recent events are resulting in daily changes around lenders providing loans to new customers. If you didn’t get any lender results off the back of your loan application on Choose Wisely, we recommend that you try again in a few weeks. Keep in mind that our lenders only perform a soft search to get you to an accept/reject result, which doesn’t affect your credit file. If you choose to continue to complete a full application on the lender’s site despite a decline, you will then be hard searched which will result in a mark on your credit file.

Bad credit loans during a pandemic

It is more challenging to get accepted for a loan if you have a bad credit score. If you are looking to take out a short-term loan, applying through Choose Wisely will provide you with the information you need to find the best UK lender for you.

The Loan Search Journey on our website will include lenders soft searching your credit file - which does not impact your credit score further - to understand if they accept your loan application in principle. You will then be shown a ranked result of lenders who are most likely to accept your application. Then you can choose the lender you want to submit a full application with, based on the total cost of the loan.

You need to make sure you can afford the monthly repayments before you apply for a loan, especially if your monthly income has been affected by the coronavirus.

Get the right loan

Use Choose Wisely's Get Accepted application process to find out who will accept your application before you apply.

Secured loans

During a time where more people are in need of emergency cash, but lenders slow down lending temporarily, one category of loans that is largely unaffected is secured loans. You can apply for a secured loan if you have a house or car to secure your loan against. Please be aware that if you enter a secured loan agreement and cannot meet the repayment schedule you agreed too, your house or car might be repossessed by the lender.

We partnered with Loans Warehouse who are specialists in finding you the best secured loan between £5,000 and £2,500,00. They also offer debt consolidation loans, where they are able to combine multiple loans into one larger loan with often better payment terms and lower interest.

Buy now, pay later - grocery & food shopping

Something as simple as going to the shop to buy food, has been affected by the virus outbreak. People are stocking up on extra food, shelves in supermarkets look empty, and those who are self-isolating won’t be able to visit the shop at all. In addition, changes in your financial situation might leave you to struggle to see how you can afford a big food shop today. Buy now, pay later providers may be a form of credit that you can access to help you stretch your budget.

If you're struggling with your budget and would like to pay for your grocery & food shop in instalments, Flava allows you to do just that. What’s even better is that they do not charge any fees to use their service and all of the credit Flava offers is at 0% APR. Visit their online grocery store today and sign up.

Buy now, pay later - catalogue shopping

If you’re struggling to afford replacing your broken TV, washing machine or other household equipment due to the coronavirus, we may have a solution for you. Yes Catalogue offers a guaranteed £300 credit line with no credit checks. Instead of paying for the full cost of the item upfront, they offer you to pay in instalments.

This business has developed a payment system that checks if you can afford repayments, which is why they won’t look at your credit score to decide if you get a credit line. Even better, every time you return as a customer your credit level will go up as they trust you to meet repayments. Visit our partner in online catalogue shopping here.

Important: Tip: Money Helper offers free and impartial support, including information and advice on coronavirus and your money, that might help you with your financial situation.

Credit Union Loans

Many traditional and bad credit lenders have had to temporarily close their doors or reduce the number of loans they give out to new customers due to the coronavirus. If you have poor credit and are looking for a way to get through this period, Credit Union loans might be an option for you.

In order to apply to a Credit Union loan, you need to join and become a member of a Credit Union. These unions pool savings of all their members together, which they can then use to offer small, low-cost loans for those in need. This is why most unions will want you to start a savings account with them before you can borrow money. The amount you have to deposit into your savings can be very small and can often be set up at the same time you apply for a loan.

The process to get a Credit Union loan is slower than a traditional loan, as you’ll have to talk to a Credit Union representative to ensure your affordability. Generally, you can borrow between £500 and £3,000 at a maximum APR of 42.6%- the equivalent of three percent monthly on the reducing balance.

To find the right Credit Union loan, you first need to find a union to join. You can search for a Credit Union here.

Small business loans and grants

Many small and medium sized businesses have had to temporarily close their doors or reduce their opening hours. This will hugely impact the cash flow and unless you have a lot of money in the bank, it is time to keep a close eye on the government support that is available and updated almost daily on the website.

So far, the government has announced their help with paying SSP for employers with fewer than 250 workers for up to 14 days. They have also deferred tax payments of VAT registered companies to the end of June 2020. There will additionally be grants available for certain businesses, for example HMRC offers a grant to cover up to 80 percent of employees salaries, up to £2,500 a month.

Grants won’t cover all negative impact SMBs are facing, which is why banks have committed to offering loans to small and medium enterprises under a new scheme: Coronavirus Business Interruption Loan scheme. Contact your bank provider to find out more about credit options that might be available to you.

Important: This is a fast-changing situation. We will be updating this page with relevant information, as and when it’s available to us. Please send us an email via [email protected] if you can’t find the answer to your coronavirus-related questions in this guide (please note that we unfortunately won’t be able to respond to every email, but we will try our best).

Inez Miedema
Written by
Inez Miedema
CMO & Take Control Author at Choose Wisely

Inez came on board in the Summer of 2019. Her main focus has been helping as many people as possible find our website through online marketing, writing content and partnership deals. She boasts 6 years of FinTech experience with other brands and has an in-depth knowledge of our customers.