Lately, a common question posed to me is, Should I take out a personal loan after the pandemic? This seems like a simple question. As such, my initial reaction is NO. Nobody should take out a personal loan after the pandemic. OR, AT ANY TIME unless they need it and have good reason for taking on the new debt.
Truthfully, whether individuals should take out personal loans post-pandemic is a personal question. Therefore, the answer is not a simple yes or no.
Reasons for Personal Loans
What is the reason for taking out the loan? Is it to catch up on rent payments? Then – YES, with a disclaimer of course. Do you qualify for a personal loan at a reasonable rate? Will the money be used to catch up on something critical like rent payments. If the answers to these questions are yes, then by all means, I think it is worth looking into.
However, the answer is different for a person who has run up their credit cards. Will he use a personal loan to consolidate his credit card payments and avoid potentially going into default? Maybe the new loan would have an initial 0% interest rate and look tempting. But that doesn’t mean it’s a good idea. There are balance transfer fees and other factors to consider. Also, is the consolidation through some kind of alleged credit management or debt settlement company? If so, you often end up with significantly higher fees. Additionally, you have no protection from the original creditors (usually the credit card companies and their collections agencies) coming after you for payment. They will use all means necessary to collect from you.
I always suggest that you have proper professional guidance before taking out a loan. Make sure you really need it. Don’t simply pile on new debt that will be a further burden in the future.
Please call me if you have any questions about this post. I am available to discuss debt relief strategies that will work for you.