How will Coronavirus affect your finances?
28.03.2020 by Dimi V
The coronavirus is a global pandemic, the likes of which we have never seen. In fact, it has resulted in an acute humanitarian crisis across much of the world. However, it is not just the disease that is problematic, but the economic hardship that many are expiring because of it.
In fact, because of the increased social isolation, quarantine, and enforced lockdowns designed to slow the virus in many parts of the world, the economy is already suffering. That means individuals are seeing their wages or work hours cut. With some losing their jobs altogether, and many others left in a precarious position where they do not know if the businesses they work for will fold or not.
The good news is that all is not lost. In fact, there are some tactics you can use to help you manage your finances during the coronavirus pandemic. Read on to find out what they are.
Government measures and loans
The first source of help that you can rely on during the pandemic is the Government. In fact, their overarching approach has been to launch a £30 billion economic plan, while simultaneously minimising interest rates. All with the view of reducing the chance of a recession.
Part of this plan will be to offer government-sanctioned loans to small and medium businesses struggling because of the coronavirus. Up to 5 million of them! Something that should help to keep such companies operating and ensure that as many jobs as possible are retained.
Additionally, the Bank of England has set up a department known as the Covid Corporate Financing Facility. Its aim is to offer fast, cost-effective ways to generate working capital for larger firms. After all, these firms employ vast amounts of people. Something that, if the Government can prevent them from folding, means many more secure jobs.
Government help for individuals
Of course, the UK Government has also considered the financial impact that individuals may suffer because of corvid-19.
The first of these measures is that they extended SSP or statutory sick pay. It now covers anyone quarantining because they have or have likely been exposed to the virus. In fact, SSP is now available from the first day off sick, and sick notes can be obtained by calling 111.
Also, those working for businesses that have been closed are covered by this plan. With those whose hours have been cut due to the virus also being accounted for. In fact, the Government has pledged to pay 80% of the wages of those prevented from working because of the corvid-19.
The Government has also recently announced measures to provide a lump grant-based sum to self-employed people as well. Although this won't be available until June 2020.
Financial help for parents that have had to take off time to be at home with children due to school closures is not currently covered. Although many expect some offer of financial assistance to be forthcoming.
Help from banks and other financial institutions
It's not just the Government that is taking steps to assist businesses and individuals during this trying time, but the banks and other financial institutions as well.
Ability to repay loans
Of course, one of the most significant issues that individuals and businesses alike will deal with is their ability to keep up the regular payments on the debts they owe.
With that in mind, some lenders will be offering mortgage payment holidays for homeowners, and other debtors, many for up to three months while things return to normal. Of course, to find out whether you are eligible for a payment holiday, you need to contact the lender you work with, so they can assess your specific situation.
Additionally, some banks and building societies will offer the opportunity for customers to take out savings from fixed-term accounts without incurring a penalty. Something that could make all the difference if the state of crisis that is occurring right now leaves people in need of cash they had not expected to need.
Do remember, however, that these emergency measures are not necessarily consistent across all providers. Something that means it's crucial to check with the one you use.
Of course, some people are worried that taking a payment break, such as the one mentioned above, will have other adverse effects. In particular, the issue seems to be the impact of such a break on their personal credit score. Something that could make getting loans and credit a lot more difficult in the future.
However, experts state that payment holidays are common practice in a time of exceptional circumstance, of which this current corvid -19 crisis most definitely qualifies. Although, if you do decide to opt for a break, just be sure to find out how the lender will be recording your break on your credit file, as this can avoid any problems later on.
Remember too, insurance policies you already hold may be able to help you if you are struggling to pay your mortgage. In particular, mortgage payment protection insurance, payment protection insurance, and accident sickness and unemployment insurance are relevant here.
Pensions and investments
Another concern for many during this outbreak is the viability of their governments and pension plans. After all, interest rates have been slashed, and that is likely to have a significant effect. Especially if you were hoping to cash in your plans soon.
The good news is that for those not yet ready to retire, there is likely to be enough time to make up any short-term losses that coronavirus will cause. In fact, if you can keep your investment where it is for 10 years or more, you may not need to worry at all.
Sadly, that does mean that those close to retirement are in a different position. Experts advise here to first assess how your pension is doing in the current climate. The reason being that some plans will not invest capital from those close to retirement in the most high-risk options. Something that means you may not be in as dire a position as you thought.
Other help available at this difficult time
There are other steps you can take to minimise the economic strain of the corvid-19 pandemic too.
Make an emergency budget plan
In fact, there is a whole range of things that you can do, the first of which is to create an emergency budget plan. That is what you will do if you are made redundant, have your hours cut, or are unable to work due to ill health.
Such a budget should cover your essential outgoings and where you will source the money to pay for these from. Whether that is savings, by cutting back now, or via some of the methods mentioned above.
It can also be very beneficial to record how to access each type of support you will need to use. Primarily because it will make things much easier and less stressful during a time that is already likely to be fraught with anxiety.
Free up any assets and equity release
Another smart move in the current climate is to liquidate any assets that you have. Therefore, freeing up as much capital as possible, in case the need for it should arise. Unfortunately, liquidating assets in a market such as this can be challenging. The reason being that everyday people will be less focused on spending money on non-essential property, vehicles, jewellery, and other goods.
There is a way around this, however, and it's to utilise an equity release service. In fact, there are two main types of equity release to consider. The first property equity release is perhaps the most well-known. The process is that you use the value of your property to secure a loan.
The other option here is to use a service like easy logbook loans that specialise in vehicle equity release. In fact, it works much the same way, with the idea being that you use the value of your car to secure a loan. Something that can provide you with a much-needed injection of cash that can help to keep you afloat during these trying times.
The great thing about vehicle equity release with a lender providing logbook loans online is that you can complete your application exclusively remotely. That is, no home visit required to come and inspect your car or sign contracts or even confiscate your logbook. In fact, because of this, it's not only a straightforward process to go through, but it's also incredibly quick. Something that makes the vehicle equity option even more practical than that of releasing equity in your home.
Communicate with creditors
Finally, another strategy that you can use to ensure you stay financially afloat during the coronavirus pandemic is to speak to your creditors. Especially if you are worried, you will not be able to meet payments.
In fact, you will find that many will be willing to offer you a little grace during this challenging time. While others will be able to arrange a lower interest rate so your credit score will not be impacted. Once things do start to return to normal after coronavirus.