If you own a reputed business or are planning to establish one, you probably know how important capital is to your overall goal of being successful. And, when it comes to getting funds for business needs, a personal loan online can be the quickest way to get hassle-free funds. However, it is always prudent to know some facts about a personal loan before applying for it.
Read this article to discover the top-8 facts about personal loan online that can make your loan application easier, especially when you are applying for the loan to fund your business.
1. Plan for Repayment Even Before Applying For the Loan
Quite often, new entrepreneurs fail to realise the importance of planning while availing a loan. As a personal loan online is a collateral-free loan, borrowers often think they have nothing to lose.
But, due to the collateral-free nature of a personal loan, the interest rates can be slightly higher than average. Moreover, if you do not pay on time, your credit score would take a hit, making it incredibly difficult to apply for loans in future. Hence, it would be best if you create a foolproof plan for repayment even before getting the fund in your account.
2. Borrow Less, Save More
With lenders becoming more aggressive and the government committed to making loans more accessible, lenders are offering many schemes to increase their customer base. Be it fewer documents required for personal loans, low rates of interest, longer tenure, or relaxed eligibility criteria, applying for a loan has never been easier than it is now.
However, try to make a rough estimate of how much you will earn and what EMI amount will not seem like a burden. It is prudent to borrow less than what you think you may require. By borrowing less, you can save more, leaving you with more money for other purposes.
3. Know the Implications before Signing on the Dotted Line
Although a personal loan online can be the easiest way to get funds, you must identify the things that will be at stake after loan approval. A personal loan increases your financial liabilities and fixed expenses. Moreover, you have to keep track of the repayments, as missing out on payments can make you a defaulter.
The best way to approach a personal loan is by creating a budget and marking out the dates for repayment well in advance.
4. Read the Terms Carefully
How good it is to get a loan at an unbeatable interest rate that apparently no other lender is offering. But are you sure about hidden terms, if any?
Before availing a personal loan online, you should read the fine print carefully, and look for part-prepayment and full-prepayment penalties, the interest cost, amortisation schedule, conditions, and other details, before going for the loan.
5. Think Long, Not Short
Novice businesspersons often make the mistake of applying for a personal loan online to fulfil their short-term goals.
While there are times when fulfiling a short-term goal with extra cash might seem a wise decision, you can get the maximum benefits from a loan if you avail it only when you are sure that the benefits you reap will far exceed the interest you are paying, albeit in the long-term.
6. Choose the Right Financing Option
There are plenty of loan options for businesspersons in India. Be it a personal loan online, MSME/SME loans, P2P lending, or many others, there is no shortage of quality schemes to get money for business purposes.
However, a personal loan online is often considered as the quickest and the easiest way of financing. That being said, it is always good to check which type of financing can be best suited for your individual needs.
7. A Personal Loan Saves Tax
Did you know you can also save tax by availing for a personal loan online?
By using the personal loan amount for business purposes, you can claim tax deductions on the interest component. Talk to your lender before applying for the loan, though.
8. Use the Loan Amount for Generating Revenue
An informed business person would always spend the loan amount on something that will create revenue.
It would be best if you apply for a loan only when you know the funds spent will come back to you, with a profit, as such an approach can ensure that you always have extra cash in your account to repay the loan EMIs.
As fewer documents are required to avail a personal loan online, businesspersons in India often trust it for all their business needs. Consider approaching different lenders and reading their terms before signing on the dotted line.