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Should you take out a personal loan to pay bills after the pandemic?

10 experts weigh in on when it makes sense — and when you should explore other options.

With unemployment at an all-time high, many Americans are struggling to pay their bills. We asked 11 financial experts what they thought about taking out a personal loan to cover personal costs after the pandemic. While many agreed it could be useful in some situations, others recommend exhausting your non-borrowing options first. Responses are opinions and were edited for length and clarity.

Robert Scott
Professor of Economics and Finance
Monmouth U

In typical economist fashion, I will answer your question with: It depends.

If someone is facing serious financial shortages that will lead to losing a home or shelter, harm to the family (for example, not getting necessary medication), then it makes sense to take a personal loan if needed to meet these needs.

Try to use the lowest interest personal loans. Credit cards are a very expensive form of debt, so are payday loans. Also, don't be afraid to ask family or others for a loan if that's an option.

People should avoid personal loans if there are ways to adjust spending to avoid it. Look for any expenses that are not necessary and can be cut immediately. People would be surprised how these small savings each month can save big money over a year.

For people stretched too far — as many are right now — survival is paramount. So if taking on some debt ensures people's well-being and security, then it is useful and purposeful."

Professor Andrew Lafond
Associate Professor of Accounting
La Salle University

Maybe – The use of a personal loan during the pandemic could be an option but before going this route, individuals should ensure that they are cutting their discretionary spending as much as possible.

Only after ensuring that you are doing everything possible to cut costs, an individual can consider borrowing money to get them through these tough times. Typically personal loans should be used only to buy assets, such as cars, finance education, or pay down credit cards. Obviously if the person can get a low interest rate loan from a family member that would be the best choice. In the event that is not possible, if the person has access to a home equity loan or a home equity line of credit, that should be the first choice as the interest rate will most likely be the lowest rate around.

If a home equity loan is not available, then the second choice would be a personal loan if the interest rate is right. Most personal loans will have a lower interest rate than a credit card and therefore would be the second option.

Lastly the only time a credit card should be considered is if you can get 0% or low interest rates for transferring balances from other credit cards to a low rate credit card and as long as the individual stays on top of this they may be able to periodically move balances around to always maintain balances with cards that have low interest rates."

Adam Sanders
Successful Release

Yes — if you've exhausted all public assistance options.

"There are a lot of different forms of financial support available, from stimulus checks to rent deferral, that you should take advantage of before taking out a personal loan that will charge you interest.

If you've exhausted all public assistance options, a personal loan can be a great way to cover your financial responsibilities while paying a much lower interest rate than a credit card.

Using the loan funds to pay your critical expenses like your mortgage, electricity and food while saving your credit score from missed payments is often a smart move."

Jeff Proctor headshot

Jeff Proctor

If you're able to pay for your mortgage, car, and basic needs but are falling behind on credit cards, student loan payments, and medical bills, then talk to your lenders first.

"Call your loan provider or credit card company and explain your situation. In most cases, they'll be willing to reduce your interest rate for a period of time or work out a payment plan to help you catch up.

If you're in danger of losing your home or your family's safety and security is in jeopardy, then it might make sense to take out a personal loan if downsizing isn't an option. However, a loan should be your last resort.

If you do decide to take out a personal loan, shop around for the best interest rate and consider how the new loan will impact your budget going forward. Depending on the loan and types of bills, you could end up with a single payment that's not much less than what you were paying separately before."

Ryan Luke headshot

Ryan Luke
Author and Founder
Arrest Your Debt

No – When the pandemic finally clears and we get back to a "new normal," we should avoid falling back into bad financial habits.

"A new start will be the perfect time to change old habits and form new ones to control our money, instead of allowing our money to control us. While debt and other financial obligations may have gone unpaid during the pandemic due to job loss or financial strain, taking a personal loan will only add to our financial stress. On average, 24 month personal loans have a 9.63% interest rate, which can compound debt and make it even more challenging to pay off liabilities.

To set ourselves up for a stress-free financial life, we must complete a monthly budget and ensure we are only spending money on things that bring us value. By cutting out wasteful spending and being intentional about paying off debt, we can gain a sense of peace and control over our money.

The best way to do this is to pay the minimum on all debts except for the one we want to pay off first. Using this approach will give us a laser focus to achieve our goals instead of taking out new loans to pay for old ones."

Madison Smith
Personal loan expert
Best Company

Personal loans can be a great benefit to those who are trying to consolidate credit card debt or need extra cash because the pandemic caused a financial hardship.

"A personal loan is cheaper than the alternative of taking on credit card debt — the average interest rate for a personal loan is around 7%, whereas the interest rate for a credit card is 15%. If you are going to take on some form of debt post-pandemic, then I suggest taking on the lower interest debt of a personal loan.

The more rigid payment plan may help you actually pay off your debts once and for all, rather than relying on the false sense of wealth that revolving credit card debt seems to get millions of people into trouble with.

The caveat is that personal loan monthly payments are required. There's no option to pay off the minimum balance like a credit card. Make sure you agree to a monthly payment plan you can afford to cover, even during a time of uncertainty."

Sho Sugihara
Co-founder and CEO
Portify Limited

Individuals should only take out loans to cover bills or debt when absolutely necessary.

As we see now during the pandemic, utility companies, lenders and healthcare providers are more likely to work with consumers to build personalized repayment programs.

Consumers should always call their current debtors and negotiate before taking out new loans to cover old bills. More often than not, we see that consumers can at least get repayment extensions with this approach.

If that is not feasible, the government has passed relief packages to help consumers with financial difficulties, including paying bills. Consumers can access more details about these government programs on

Howard Dvorkin
CPA and personal finance expert

It could if you have large credit card balances and little cash flow.

Yes, if you've racked up big credit card balances — at something like 20% interest — and you don't have the cash flow to make anything but the minimum payments. A personal loan at a 6% rate will save you hundreds and maybe even thousands of dollars.

Steven Welch
Chair of the Department of Accounting and Finance
Saint Benedict, Saint John's University

Normally, no — unless you're paying off credit cards or other high-interest debt.

Generally, it's not wise to take a personal loan to cover low-interest debt such as home mortgages, auto loans or other debt that has collateral. Always pay off the highest interest debt first — often, that's credit card debt.

If you want to consolidate your debt from many accounts, that's OK. But you shouldn't include debt that has a lower interest rate than the consolidation loan unless absolutely necessary to reduce your payment to a manageable number."

Anna Serio
Personal finance expert and writer

It all depends on your financial situation and what kind of rates and terms you can qualify for.

"You might not want to consider taking on more debt until you've exhausted other free financial assistance, like grants to individuals and interest-free deferment.

Some lenders were offering low- or no-interest loans with around three months of deferred repayments at the start of the COVID-19 outbreak. But as states reopen, those options are likely to dry up — along with other government assistance.

The pandemic has affected the lending industry as much as everyone else, so you can expect some changes to how personal loans work in the coming months. Consulting a financial adviser can help you navigate the shifting economy and decide which option is right for your situation. You can often find free personalized advice through a nonprofit credit counseling agency."

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