In order to increase the current business, you need to have a business plan. But due to the financial institutions who charge a high-interest rate for bank loans EMI, it’s not possible. You need to find some ways to reduce the business loan EMI, which will prove to be a great help. A few points help reduce EMI amount: Cibil Score, Part prepayment, Long Tenure, Negotiation, Balance transfer, Market research, Collateral, and Business vintage.
So basically the new business loans are of two types, secured loans and unsecured loans. In unsecured business loans, you do not have to provide any security for taking a loan whereas, in fast loans, you have to provide some collateral, security or guarantee for taking a loan.
CIBIL Score: The cibil score is three numeric digit numbers which start from 300 and end at 900. So in necessary CIBIL scores, determine your ability to pay back the business loan EMI. Generally 650 or above is considered a perfect credit score. Therefore an excellent cibil score always plays a significant role in reducing the interest rate on a new business loan. If the credit score is good, then there is a high chance that you can get a business loan at a low-interest rate. And if you have a bad cibil score, then the chances of getting a loan at a low-interest rate is low, and you may get a business loan at a very high-interest rate.
Process to Reduce Business loan EMI:
Negotiation
If the borrower has a high cibil score, you can negotiate and avail the business loan at a lower interest rate on the business loan, so remember this whenever you borrow a business loan from any lender. You always read about the loan terms and conditions to negotiate with the lender for a lower interest rate. Even if you are an existing customer, you can deal with them only when you have a good relationship.
Long Tenure
Another prominent factor that helps in reducing the business loan EMI amount is long Tenure. Suppose you are choosing a long tenure for your business loan then the total amount of EMI will be distributed for an extended period. The monthly Equated Monthly Installments can be reduced by using this method. This will most definitely reduce the EMI by increasing it over the long term, but the overall amount paid on business loans will increase.
Balance Transfer:
The best way to get instant business loan is through balance transfer. Suppose you have already taken business loan from any financial institution. So you can transfer your business loan to another lender, so it helps to reduce your monthly EMIs. As of now, almost all financial and non-financial institutions are in the process of facilitating balance transfers. So one can reduce their monthly EMI with the help of a balance transfer agency.
Market Research
One should always research a financial and non-financial institution when taking a business loan that offers a competitive business loan interest rate. Before contacting the lenders go through the business transfer plans. This will help in the reduction of the EMIs of the business loan.
Healthy Existing Relationship
If you are taking a loan from a financial and non-financial institution with whom you have an existing relationship. So you can quickly negotiate the interest rate with the lender. You can take advantage of a lower interest rate on your loan amount if you have a perfect relationship with a financial institution.
These were the ways that can help you get a new business loan at a lower interest rate through MSME loan scheme. But make sure to pay your dues on time and build the trust of the lender.
FAQS:
- What is CIBIL Score?
Cibil score or credit score determines your ability to repay the loan in allocated time which helps in the future loan.
- What is prepayment?
Prepayment is an early payment that can be done earlier than the loan tenure period.
- What can be used to reduce EMI monthly load?
Prepayment, market research, balance transfer etc. can be used to decrease the Monthly EMI load.
- Is researching about financial institutions important?
Yes, they are, they can significantly decrease the EMI and help in the optimum usage of your capital.