Breeze through your loan repayments with this smart guide
Sometimes our dreams exceed what’s in our bank accounts, especially when it comes to taking our business to the next level. A business loan can be the ideal solution to this problem, but you need to consider the repayment process as well. This article will act as your guide to repay business loan by giving you several payment possibilities and tips to repay your loan.
Here are some business loan repayment strategies you should be acquainted with:
Lump sum repayment:
When you make an agreement with your lender to pay one large sum per year, rather than giving them as recurring payments throughout the year.
Periodic interest and lump sum repayment of principal:
When you agree with your lender to only pay interest for a particular time, then pay an amount including both interest and the principal in one lump sum.
Periodic payments of principal and interest:
When you arrange a series of periodic payments of principal and interest throughout the course of a year with your lender.
When you pay an equal, monthly payment (EMI) to your lender that includes both the principal amount and interest.
Your next question might be, “but which payment plan should I choose?” The answer to that question lies in whichever payment plan both you and your lender are most comfortable with. Make an educated selection based on your loaned amount and the interest being charged. Financiers like Bajaj Finserv offer a Business Loan EMI Calculator to help you calculate your precise EMI and plan the monthly payments accordingly.
Things to Watch Out for
Some lenders will charge you with prepayment charges on business loans. This means that if you are able to repay your loan earlier than originally agreed to, the lender can charge you a fee to make up for the lost interest. When choosing a lender to take a loan from, try to avoid ones that charge such penalties. Bajaj Finserv for instance, does not issue prepayment charges for their Business Loans, and even allows you to prepay your Loan up to 6 times per year.
They also have a Prepayment Calculator that you can use to help calculate future payments.
Another thing to carefully examine before agreeing to a loan is the business loan interest rate. Besides the actual rate of the interest, you should assess if the lender’s rate is either fixed or floating. A fixed rate means that the interest does not change throughout the period of the loan’s existence, while a floating rate means that the interest can change over time. Both have their advantages and disadvantages, but it is important to obtain these details before agreeing to anything.
The Internet is Your Friend
Some financiers allow you to apply for a business loan online, which can make things more comfortable and convenient for you. Bajaj Finserv offers Business Loans with approval within 72 hours, as well as online EMI payment options. Apply online for a business loan here.