As a result of COVID-19, many Ohioans are now facing unemployment or uncertainty about the length of their employment. In this environment, some people may look to short-term loans to cover immediate expenses.
Generally, short-term loans are between $100 and $500. The interest rates for short-term loans are typically very high, so these types of loans can be hard to pay back immediately. Ohioans may struggle to pay off the balance while covering other expenses. If the loan is extended, consumers will likely be charged additional fees, resulting in higher amounts of money owed.
When considering a short-term loan:
- Shop around. Before doing business with a particular company, check for complaints filed against it with the Ohio Attorney General’s Office and the Better Business Bureau.
- Many lenders must be registered with the Ohio Department of Commerce. Verify that a lender is properly registered or licensed.
- Read and understand the terms and conditions of the loan. Check the payback dates and find out if you can make partial payments or if the loan must be paid off in one payment.
- Make sure you understand all costs, including interest rates. Be especially aware of any extension fees if you are unable to repay the loan within the original time period.
- If you don’t feel comfortable with the terms of a loan, walk away.
Also consider alternatives such as:
- Working with a nonprofit credit counseling agency
- Identifying unnecessary short-term expenses
- Going to a bank or credit union for a short-term loan
- Borrowing from friends or family members
- The business community is aware of the drastic change in many Ohioans’ finances and may offer payment programs and deferrals of payment that have not been offered previously. Check with your lender (mortgage, landlord, utility, credit card, personal loan provider) for pandemic-related payment programs before taking out a high-interest, short-term loan.
If consumers are unable to pay a bill on time, they should contact the business or credit card company as soon as possible to ask if they offer hardship or forbearance plans due to COVID-19. If an arrangement has been made between the lender and the consumer related to COVID-19 hardships and the consumer pays in accordance with that arrangement, the lender cannot report such payments as being late to the credit reporting agencies.
At the request of consumers, a lender may be able to add a code to the consumer’s account that indicates they have been affected by the pandemic. That circumstance will be noted on the consumer’s credit report until the lender removes it. The presence of the code can help minimize the impact to the consumer's credit score. Consumers can also contact credit bureaus directly to dispute information or to add a statement to their credit report explaining that they have been impacted by COVID-19.
Small businesses are also being affected by COVID-19 and may need help paying bills. Small businesses should follow the same tips as above, but they should also be mindful of fake grants. Scammers may pretend to offer grants for an up-front price; never pay up-front to receive grants.
If you suspect a scam or an unfair business practice, report it to the Ohio Attorney General’s Office at
www.OhioProtects.org or 800-282-0515.