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Five key aspects that you should take into account before taking out a loan

By | John Preston

If you are considering applying for a loan, we suggest that, when making the decision, you must be fully aware of the commitment you are assuming and you must be sufficiently informed and informed. For this reason, we present five key aspects that you should take into account before taking a loan:

1. Purpose of financing:

The requested loan must satisfy a fully identified need that really has a positive impact on your quality of life or gives you added value. It is not a good idea to get carried away by the commercial enthusiasm to which we are subjected through the media. Basically, if you are not an organized and above all disciplined person, we urge you to think very carefully before assuming such a serious commitment.

2. Research and consider various financing alternatives:

Research and explore various financing options. However, the entity that requires less documentation will be the best option. Each entity has its own policies, which you will accept or not, according to your needs, but do not trust who tells you that they are going to lend you without much research. Look for entities with a proven track record, with a good reputation and proven financial stability.

3. Look for good terms, not just rates:

One of the main references to make the decision of a loan is the interest rate. Obviously, the rate is an important aspect, but it should not be the only criteria for making the decision. The conditions of the loan are also a trannscendental aspect to consider since an attractive rate does not make much sense if the credit conditions are inflexible and abusive. For example, the impossibility of making capital payments, not being able to pay installments in advance and not having the power to cancel the credit facility before the first three years, are negative points that must be taken into account before signing the contract.

4. Calculate your ability to pay:

Payment capacity is the ability of a debtor to generate cash flows that allows it to honor its financial commitments under the originally agreed conditions and is an essential element when financial institutions approve loans. Request an amortization table with the selected term and rate where you can see the monthly payments.

The first thing to consider is your income and other alternative sources of repayment that have a periodic trend. Once the real and permanent sources of income have been identified, carry out an analysis of your expenses, for which we recommend you to be honest and not hide information.

When this exercise is complete, you will have an idea of ​​your monthly spending structure. In this way, you can already calculate if you have the ability to pay to honor the installments. From your income, subtract the total expenses and that amount should be enough to cover the payment of the fee.

5. Look for an entity that gives you excellent service:

It is important to know how to choose an entity that identifies with your needs and always gives you a first class service. Avoid entities that treat it in a nondescript way, as if it were an account number. Savings and credit cooperatives, for example, are characterized by having strong roots with their members and with the communities where they operate. Most of these do not have as many charges and have greater rate stability. In addition, at the end of each fiscal period, these solidarity economy entities return to their partners a percentage of the interest paid and on the total contributions.

Once the loan has been granted, make payments on time, do not complicate your existence, do not incur superfluous expenses, discipline your consumption habits, try to reduce expenses as much as possible, reflect before getting involved in something that could affect the payment of installments.

Taking a loan is a serious decision, which, when used well, will generate future benefits. If you act otherwise, you would be putting your economic, emotional and family stability at stake.

Why is financing the most important thing in a business?

We currently live in a globalized and increasingly competitive world. Financing is the fuel on which a business runs. It is a support that helps the company to continue with its growth and expansion, to achieve its objectives in the short and long term.

When we have a business it can be difficult for us to detect the precise moment to grow; especially when we do not have the resources that we would like to invest in our business. Before looking for financing, it is necessary to carry out a real projection, to determine the goals of our investment and to consider the different payment scenarios and thus avoid over-indebtedness.

Here we show you some advantages of obtaining financing for your company:

  1. It helps you stabilize the cash flow of your business, you will have better control of your income, debts and fixed expenses, such as rent or mortgage, water, electricity, telephone services, etc.
  2. It is a negotiation tool that helps you negotiate product conditions, prices and deadlines with your customers and suppliers.
  3. Keep your company in constant innovation. Many times the modernization cannot be done with its own resources, since cash has to be accumulated for a long time.
  4. A financing can be used for multiple projects; either for working capital, current assets or even to be able to finance the daily operation of your company always within a financial cycle.
  5. You will have the possibility of accessing various financial services. When you obtain a bank loan, you can more easily access other complementary products that boost your productivity.
  6. With adequate financing and the right orientation, your company will become bigger, more consolidated and more productive.

Adequate financing allows a company to function correctly on a day-to-day basis and makes the rest of the areas work well. Did you know that Bi-Credit has a wide range of products for its clients? Each one of them is adjusted to the needs of your company, always giving you the possibility of consultations through the Bi Banking service, giving you greater control, detailing the consumption and made.

 

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