Financial Fallout from Hurricane Sandy: Are Disaster Loans the Best Way to Go?

Now that the dust has settled after Hurricane Sandy, many East Coasters are facing the unfortunate reality of how the storm has rattled their finances. Time Magazine estimates that Sandy will cost $60 billion between property damage and lost business. But banks and lenders have placed a sliver of hope on the horizon.

CNN Money recently revealed that banks are giving hurricane victims several generous breaks on credit and personal loans. For example, Wells Fargo is offering unsecured personal loans to residents in FEMA-designated areas at a low rate of 6.75 percent, instead of basing their borrowing decisions on creditworthiness.

Palisades Federal Credit Union in New York City reported that they’re offering personal loans at half off the standard rates for the next two years for storm-affected residents. Goldman Sachs also pledged $10 million in loan relief funds for small businesses while the Small Business Association is offering special disaster loans.

Whether you’re searching for aid to fix the damage or are left with little in your pocket after paying for repairs, there are a few things to consider before you reach out for an unsecured personal loan. In the midst of natural disaster chaos, it can be difficult to determine if you’re making the right moves.

Fortunately, applying a few level-headed moves may help reduce the risk of regretting the decisions you do make for the health of your bank account.

Lean on Your Insurance First

It’s important to know what options your insurance company can provide you before you seek out a loan. You may have a hurricane deductible anywhere between 1 and 5 percent of your home value without even realizing it.

As a result, you may not need as large of a loan amount after an insurance adjuster assesses the payout size. Because your payout has the potential to cover all extraneous costs, it’s vital to photograph and document every single piece of damage to ensure maximized compensation.

Avoid the Instant Access of Payday Loans

Payday loans may seem like a quick fix, but in the midst of dealing with a disaster, these loan terms may be too short for what you need.

You may not be able to contend with the interest coupled with the repayment, especially when the cost of damage lingers longer than the loan terms. In this case, you may get unintentionally caught in a debt spiral from taking out another payday loan to compensate for the previous one.

Explore Your Options

Storm victims don’t have to necessarily settle for standard borrowing options. Rely on basics like food and clothing from donations from the Red Cross, FEMA and local shelters so that you can funnel your dollars toward paying for home or business damage.

You can also see how family or friends unaffected by the storm might be able to help you in the meantime. No matter how low disaster loan rates may seem, you will likely find no interest rates from loved ones.

Another option is to consider if a balance transfer card with a zero introductory rate is enough to stave off some of the hurricane’s financial costs until you can get better organized.

If you’d like to learn more about if unsecured personal loans are the way to handle your post-hurricane finances, check out Click N’ Loans today.

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