This post may contain affiliate links and/or paid placement. Click here to read our full disclosure.
It’s an understatement to say that the US economy is in a turmoil.
To protect our economy from a major recession the Federal Reserve utilized the most powerful lever they have and cut interest rates down to ZERO. Moreover, they decided to buy $700 billion in government and mortgage-related bonds.
But what does this mean for the average consumer and will it have an effect on the most vulnerable in our society? Those with unstable employment, low credit scores, and little money in the bank.
Getting a personal loan with a low credit score is not easy. Lenders who are willing to take on high-risk loans have traditionally been frowned upon or labeled as “predatory” because of their high interest rates. But for many responsible and even financially-savvy individuals and families, it can be a lifeline of resources to get by in a time of crisis.
Here’s how to navigate the Coronavirus pandemic and get a good loan if you have a low credit score and need extra funds to keep you afloat until things bounce back.
How does lowering the Federal interest rate actually work?
In our trickle down economy, everything starts with the rate banks charge their most creditworthy corporate clients. This is known as the prime lending rate, or “the price” and is linked to the Federal Reserve’s target rates.
When the Federal Reserve lowers the interest rate, they give good loans to banks, who give good loans to consumers, thus stimulating our economic growth.
Every bank that lends money is itself lending the money from another bank or pool of investors. When the Feds reduce the rates we can expect interest rates to drop across the board.
President Trump has been pushing the Feds to lower the interest rate and once it was approved he said it “makes me very happy”.
Will this affect my mortgage payment?
This depends on the type of mortgage you have. If you have an adjustable rate you will see your rate drop, but If your mortgage is linked to a fixed rate, then you’ll continue paying the same rate. Depending on your fixed rate, you might want to consider refinancing your home.
You can calculate whether it’s worth refinancing now before calling your mortgage broker using online tools to see how much you’d save each month and comparing it to the refinancing costs. However, if your credit score has decreased since you received your loan, refinancing is probably not a wise choice.
How can I get a good personal loan online?
Most lenders who issue personal loans for low credit consumers are also affected by this stimulus package. They will be able to pass the savings to their borrowers. Here’s what you need to know:
- Some of the best lenders only work with networks and are not accessible directly.
- Applying to lenders directly can be time consuming and negatively affect your credit score.
- Not all networks are created equal. The best ones have direct relationships with many lenders and are able to pass down the savings to you.
What is the best place to get a personal loan online during the COVID-19 pandemic with a low credit score?
From all the websites we’ve compared, Viral Loans is the best place to get a loan if you’re looking to borrow up-to $10,000. They work with over 100 different lenders and have a high success rate when it comes to getting people the loans they need.
- Quick application form with minimal information required to apply.
- Get approved instantly.
- Get a deposit in your bank on the next business day.
- Most of their lenders do not do a hard credit pull.
How do I get approved for an online personal loan?
Getting approved on a loan application with low credit score depends on many market factors which can change daily. Filling out an application for a bad credit loan online is not very different from applying for a traditional loan. Here are the best tips:
- Don’t apply for more than you need. Especially if your creditworthiness is low, aim for a lower borrowed amount.
- Be sure to enter accurate information in the form.
- If you don’t get approved today, try back again tomorrow. Rates and demand changes everyday. Lenders who reject an application one day could approve it the next.