5 Common mistakes to avoid if you’re a doctor borrowing money
It’s a well-researched fact that good doctors earn more money than any other professional with the same amount of experience. This makes most doctors well-qualified to avail loans from banks and financial institutions. Some organisations, like Bajaj Finserv, offer customised Doctor Loans in India to assist medical practitioners with their monetary needs.
No matter how much money they make, many doctors choose loans which don’t fully meet their needs and often end up losing a lot. If you’re a doctor looking for a loan, it would help you if you knew what to avoid when borrowing money from lenders. Here is a list of common mistakes physicians make while taking a loan.
Investing In the Wrong Things
One of the worst mistakes doctors make while borrowing money is taking loans for the wrong reasons. For example, if you’re running out of money to pay your staff, borrowing money to cover their salaries puts you in more debt. Try budgeting your payrolls instead.
If you don’t need to buy new equipment, don’t buy it. If your existing equipment is faulty, send it for repairs instead. Most electronic and mechanical equipment can be refurbished and worn out parts replaced. Don’t let a burnt capacitor, worth a few hundred rupees, set you back by a few lakhs.
Not Addressing Their Specific Needs
If you want to expand your infrastructure or buy a new ambulance, don’t blindly go for business loans and vehicle loans. There are customised loans available for physicians to help them save their precious money. Use them to your advantage.
These loans, like the Doctor Loan offered by Bajaj Finserv, are designed exclusively for doctors and their requirements. In fact, doctor loan interest rates are relatively lower compared to regular business loan interest rates. They can also be availed for larger amounts and longer tenors which could go up to 60 months, or in some cases, even more.
Not Getting Involved With Money Matters
When it comes to money, many doctors leave their finances in the hands of brokers. And most of the time a broker is only thinking of how he can make more money and not how you can save more money.
Get dirty with your investments and negotiate your loans personally. If a bank can make the effort to customise a loan for you, you should make the effort to get personal with your money too. In fact, try to build a trustworthy relationship with your bank or lender if you are planning to borrow more money later. You could end up getting much better deals on your subsequent investments.
Not Exploring Their Options
Try not to rush when you deal with large sums of money. Some doctors will stop the search for financing options after approaching the first lender itself. This should be avoided at all costs.
With the variety and range available in the market right now, you could easily find yourself a better deal if you spend a little time talking to multiple vendors and assessing all the different offers.
Not Exercising Foresight
A lot of times, doctors will borrow money for things which won’t generate enough capital to recover the borrowed amount. Whether its equipment or a pharmacy, you need to see how much money you’re spending and how much money you’re going to get back. If you invest in something without understanding how it helps repay your loan, it makes no sense borrowing money and increasing your debt.
Before you invest in anything for your practice, ask yourself a few questions like. ‘Will this get me more patients?’, ‘Can I increase my fees by acquiring this machine?’, or ‘Will this help me cut down on existing expenses?’ Be realistic and don’t borrow money for things which don’t increase the value of your practice.