Many leading NBFCs with a view to facilitate chartered accountants financially have come with several types of loans. They can suffice their both professional and personal needs with a substantial fund at their disposal.
It becomes easier once a debtor understands every granular detail associated with the entire process. The borrower needs to consider the following aspects when applying for the CA loan.
Borrow what is required
It should be the thumb rule in case of availing a CA loan. It is essential that the monthly outgo of the borrower must not exceed 50% of his income. The loan-to-income ratio also determines the loan eligibility.
NBFCs like Bajaj Finserv offer Flexi Loans which help you borrow only what you need and pay interest only on the sum used and not on the entire sum. Moreover, this facility allows you to prepay the loan as and when you have extra cash, at no extra charges.
Try to keep the tenure short
You may opt for a long-term loan to expand your CA firm and outfit other expenses. In such a case, a debtor generally tends to keep the repayment schedule longer keeping the EMIs low.
However, it is always best to opt for a shorter tenure as it’ll help you to repay your CA loan as fast as possible. This practice contributes in saving a considerable amount by not paying extra interest amount.
Pay EMIs on time
Late payments of EMIs at times need penalties and also negatively impact one’s CIBIL score. CIBIL signifies a debtor’s credit and financial history. Missing an EMI can affect the credit profile negatively. This, in turn, acts as an inhibitor for the consumer to avail loans in the future days.
Many NBFCs feature part-prepayment facilities in CA loan making repayments easier and affordable. For instance, Bajaj Finserv offers a flexible part-prepayment facility that allows a debtor to prepay an amount equivalent to a minimum of 3 EMIs. A debtor can thus cut down both this principal and subsequent EMIs.
Never take a loan to invest
This is another basic rule to follow when one takes a CA loan. Never use the borrowed fund to invest in stocks, shares or similar purposes. It is often seen that investment channels fail to generate returns when compared to the amount of interest one pays to repay the loan.
Take insurance with the big-ticket loan
Every big-ticket borrower must take an insurance policy which is equivalent to the loan. It is a preventive measure. If something happens to the borrower and the loan is not repaid, the insurance policy will cover the same.
Substitute high-cost loans
Taking a chartered accountant loan to consolidate too many unsecured loans makes sense. For instance, a CA may take a loan against property to repay all the outstanding debts and repay a single loan comfortably.
Under the fine print
It is also necessary to read between the lines and match all the basic CA loan eligibility criteria. Furthermore, going through the loan agreement papers is also essential to understand the terms and conditions. Ask yourself the important questions before finalising the lender for a CA loan.
Switch the lender
It is always better to look for institutions that offer competitive CA loan interest rate. Compare different lenders online and scrutinise their features to get the best of the benefits. This will aid in saving a lot on those incurred interest rates.
By following these eight rules, a borrower is surely going to benefit from a chartered accountant loan and aptly fulfil his liquidity requirements.