Millions of Americans have been laid off in the course of the coronavirus pandemic. As a result, many households are experiencing financial hardship right now. If you're unemployed or your income's been hit by the ongoing crisis, you may be able to take out a coronavirus hardship loan. Here's how.
A coronavirus hardship loan is a special kind of personal loan available to those who have been impacted financially by the pandemic. Like a personal loan, you can use a coronavirus hardship loan for any purpose, like:
Coronavirus hardship loans are generally smaller loans. Most hardship loans range from $500 to $5,000 -- enough to get you through a few months of unemployment. These loans come with low interest rates starting at 3%. The repayment terms for these hardship loans are flexible, ranging from six months to five years.
So where can you find a hardship loan, and how do you qualify for one? We'll go over these and other questions below.
You can get a coronavirus hardship loan from an online lender, your bank, or a credit union.
Some online lenders are offering coronavirus hardship loans.
Online lenders also offer loans for individuals who need help paying medical or other bills, but can't prove significant income loss due to the pandemic. If you're having trouble making ends meet, but you're not sure if you qualify for a hardship loan, you could qualify for a low-interest personal loan with an online lender.
Looking for a personal loan but don't know where to start? Compare some of the top loans available with our list of best personal loans. Our experts ranked these loans based on interest rate, requirements to qualify, repayment terms, and more.
Several banks are giving out coronavirus hardship loans. If you have an existing relationship with a bank, call and ask about the bank's available hardship loans. The interest rate you get and the length of your repayment period will depend on the specific lender. The American Bankers Association also has detailed information on which banks are offering relief during this time. You can search for a bank by name on its website for more information.
Coronavirus hardship loans are largely available through credit unions. If you're not already part of a credit union, you'll need to join one to explore this route. You can use the National Credit Union Administration's credit union locator tool to find one near you (some credit unions require that you live in a certain area to qualify, so this tool will help you narrow down your options). Many credit unions are letting coronavirus hardship loan borrowers automatically defer their payments for 90 days, which is great if you're in a financial crunch right now.
Each lender will set its own coronavirus hardship loan requirements.
A coronavirus hardship loan is a short-term loan for those who can prove their income has been slashed by the COVID-19 pandemic, so you may need to provide proof of income loss. There have, unfortunately, been many incidents of coronavirus relief fraud since the pandemic began, so don't be shocked if you're asked to share a lot of detail on your financial situation.
Also, keep in mind that the better your credit score, the greater your chances of getting approved. You check your credit score for free online. If it needs some work, check out our guide to improving your credit score for key strategies to build credit.
If you don't qualify for a coronavirus hardship loan, you could instead apply for a regular personal loan. This shouldn't be your first choice -- you may get stuck with a higher interest rate and a less flexible repayment term than you would find with a hardship loan. Still, generally speaking, you'll pay a lower interest rate than you would on a credit card.
If your main concern is paying medical bills, look for a medical loan. We've compiled a list of top-rated medical loans, which could be a good starting point for your search.
If you own a home, you can also try applying for a home equity loan or line of credit. Some lenders hit pause on home equity lines of credit earlier on in the pandemic, but plenty has happened since then. You may have an easier time getting one at this stage of the pandemic.
Of course, there's also the option to reach out to the people you owe money to and request direct relief. For example, if you ask for help, your landlord might agree to let you defer rent payments for a few months, your credit card company might waive a late fee if you need more time to make your monthly minimum payments, and your utility providers might give you extra time to pay your bills. Be sure to explore these relief options on top of a coronavirus hardship loan, especially if you're really struggling to make ends meet.
The COVID-19 pandemic has been a difficult time for everyone -- some more than others. If you're experiencing financial hardship right now, you're not alone. Check out our list of coronavirus resources for more information on where to find help and support in this challenging season.
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