There are numerous loan providers and financial institutes offering business loans. Most of these loans come at a higher interest rate and consecutively need higher EMIs. But, there are several ways to lessen the EMI burden on business loans. Keep reading to know what they are.
Pro Tips to Lessen Your Business Loan EMI
Negotiate for the lower rate of interest with your high credit rating
If your credit rating is high and you also have a long-term association with the bank, it is feasible to discuss the terms of a loan with the bank. In general, banks are keen to grant a lower interest rate for those with a good credit rating, and it is because they are considered dependably and fiscally trustworthy. Also, banks seek to retain such clients as it aids them in augmenting their reliability quotient.
Go for the step-down EMI option
You can find several financial institutes and banks offering step-down EMI options for their clients. The debtor, under this scheme, when availing of a business loan in Lucknow, needs to pay a big EMI amount at the starting of the term. As the term advances, the EMI amount decreases because the principal amount lessens post payment of installments per month. The step-down EMI option can aid in lowering the interest burden over the loan term. It is a perfect alternative for those who are about to retire as it gets adjusted according to the cash flow necessities of the person.
Decide on loans with a longer reimbursement period
If you opt for a loan with longer reimbursement tenure, the whole reimbursement to be made gets dispersed over a long time. This will lessen the load of per month installment as the monthly payable amount decreases. However, remember that choosing a longer loan period also signifies that you’ll need to pay interest on the remaining arrears for that period. When opting for a longer loan period can aid in reducing the EMI, it can mean a greater interest load over the remaining period. Ensure to ponder all the pros and cons before deciding on a longer loan period.
Go for a balance transfer loan
A balance transfer loan helps lower your loan EMI as such loans are provided with lower interest rates. But, it is also vital to consider other aspects like processing charges and other fees to ensure that it is really worth transferring your loan amount to a different bank.
Choose a high down payment
The customer pays upfront while buying a particular item is referred to as a down payment. As the customer bears a portion of the entire cost of the item, the amount that the customer will need to borrow as a loan will reduce, too. The loan interest is calculated on the basis of the principal amount made use of by the customer. Thus, the more the loan amount, the more money you’ll need to pay as interest. So, it would be better to pay a significant amount as a down payment. This will help you in lessening your business loan EMI and save you more in the future.
Business Loan EMI Calculator
A business loan EMI calculator makes it easy to calculate the EMI prior to applying for a loan. If you want to calculate your business loan EMI, you just need to give your basic details like reimbursement term, rate of interest, loan amount, etc. The EMI is calculated automatically once the details are entered by the financial institute or the loan provider.
Calculating the loan EMI amount manually can be very time-consuming. So, businesses have developed business loan EMI calculators.
The financial institutes use a formula to calculate the EMI and the rate of interest on the business loan in India. These are the parameters on which the EMI calculator works: Rate of interest, loan amount, and reimbursement term.
Emi calculate formula = P x r x (1+r) n / (1+r) n-1
E = EMI amount
P = Principal amount
r = Rate of interest
n = Tenure of the loan
In case you miss the EMI amount, then it’ll be adjusted in the next month. The EMI in the next month will be double the current EMI.
Acquiring a loan for business through an EMI calculator isn’t a challenging task. It can be acquired via precise calculation, choosing a suitable loan amount, and tenure. It is always good to calculate your loan EMI prior to applying for a personal or business loan.