COVID-19 impact: Types of loans people are opting for in times of pandemic

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While personal loans always top the chart, recently a line of credit has also become a solid choice amongst borrowers.

COVID-19 impact: Types of loans people are opting for in times of pandemic
Amid the COVID-19 pandemic, financial crunch faced by most people, especially those who have experienced layoffs or pay cuts, has forced them to live with the bare minimum. As a result, they have been moving towards different borrowing options to survive and finance their basic livelihoods.
While personal loans always top the chart, recently a line of credit has also become a solid choice amongst borrowers.
According to Tushar Aggarwal, CEO & Founder, Stashfin, individuals who are looking for more wiggle room while dealing with monthly expenses are likely to go for a line of credit.
“Line of credit offers flexibility to borrowers and comes with the convenience of easy processing and quick disbursal. Rather than taking small personal loans and going through the application process repeatedly, users now prefer to have a line of credit on the back burner, ready to be tapped into as and when they require,” Aggarwal said.
With a line of credit, all the expenses are converted into flexible EMIs and come especially handy for borrowers dealing with difficult times during the pandemic and help them keep their families safe from any financial hardships.
Other borrowing options that have been amplified are gold loans and top-up on existing home loans.
“These loans are being taken by those people whose current employment status doesn’t provide them an opportunity to get a personal loan. As a result, they resort to more secured loans,” said Anil Pinapala on Founder & CEO of Vivifi India Finance Private Limited.
According to Kunal Nandwani, co-founder and CEO, uTrade Solutions, gold loans have gone up recently for emergency personal needs.
“Also, GECL government-sponsored “Covid-loans” for corporates that had credit lines with banks, have gone up for additional cash flow financing. Some young professionals have even taken this opportunity to go for higher studies leading to a surge in education loans as well,” Nandwani added.
Lastly, ‘Buy now pay later’ loans have increased dramatically due to their increased adoption on online commerce websites and the convenience that they offer.
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