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5 Things You Must Check When Applying For A Commercial Car Loan

Are you seeking small business financing for vehicles you intend to use in your daily business operations? Well, you can now achieve this thanks to the increasing number of financial institutions offering small business funding to business owners. Here are 5 things you must check:

 

Interest rates

An interest rate is the percentage of the principle, charged by a lender on the amount applied for by a borrower for the use of the funds. Interest rates generally vary from one lender to another depending on the terms of each. Also, interest rates can be influenced by the type of loan applied for by the borrower. For example, the interest rates charged for unsecured business loans are usually higher compared to those charged for secured business loans. It is always important to check the interest rates offered by the financial institutions you. You should avoid lenders with unfavourable interest rates. It is advisable to check the interest rates of various lenders and compare them to help you decide on the most suitable lender.

 

EMI amount

EMI, an abbreviation for an equated monthly instalment, is the fixed payment amount that a lender requires a borrower to repay at a specific date of each month until the loan is repaid in full. EMI typically include a part of the principal and the interest amount to be repaid. Borrowers usually make fixed periodic repayments to the lender with the aim of paying off the loan in full. EMI may vary from one lender to another; hence, it is important to choose the financial institution offering the most favourable equated monthly instalment.

 

Processing Charges

A processing charge or a processing fee is a charge for costs to the borrower for acquiring documentation, employment, credit history and appraisals or any other information essential for the underwriting department of a financial institution. It covers a variety of different elements, which feature miscellaneous fees that cannot itemise themselves. Typically, your prospective lender will impose processing charges, primarily for the documentation-related exercises. They may also impose a processing charge when they have to consider other legal services while processing your car loan application. Some lenders charge a fixed processing fee while others charge a varying processing fee. It is important to check the types of processing charges offered by a financial institution before applying for a commercial car loan as they will have a direct impact on your cash flow – never ignore the fine print.

 

Repayment terms

The repayment terms offered by financial institutions are important when applying for a car loan. The best types of small business loans to opt for are those featuring easy repayment terms. A majority of alternative lenders such as Hubbe Australia usually offer loans with easy repayment terms. While applying for a car loan, you can choose a longer loan term and pay off the loan gradually over time. You can consider car loans with repayment terms of between 12 and 60 months.

 

Loan Tenure

Loan tenure is the period between the time of loan disbursement and the time of closure of the loan. Loan tenure can be adjusted in the event the lender and the borrower agree to adjust the interest rates or the borrower is willing to add an extra fee.  One of the benefits of  a loan with a longer tenure is that you are able to maintain a positive cash flow since it offers flexibility. Also, a longer tenure is likely to come with a lower interest rate, which can be a plus for your growing business.

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