Are you a business owner trying to get your venture up and venture running? Or want to introduce the latest technology into your established business operations? Then, a loan provides you with the necessary funds to finance your business’s needs.
But what if you’re not satisfied with the current business loan interest rates or the loan repayment plan? This is where loan refinancing will help you. Read on to understand the top 5 things you need to consider before applying.
1. Make sure if your lender offers loan refinancing
Before refinancing your loan, check if your current lender offers this facility. If your lender does not provide this feature, you will not be able to refinance your future loans. Hence, when applying for a business loan, make sure to go for a lender that allows refinancing for future convenience.
2. Compare interest rates
The most significant advantage of refinancing is enjoying lower interest rates. You can easily make the switch from a high-interest rate loan. Here, you’ll save substantially on your overall interest cost and monthly EMI. Therefore, thoroughly compare the various offerings and pick an affordable business loan interest rate lender. Also, look for more flexible repayment terms and eligibility conditions for a comfortable borrowing experience.
3. Consider your credit score
Each credit activity impacts your credit score, and a high CIBIL score boosts your chances of loan approval. However, when refinancing your current loan, ensure that it does not compromise your credit history. Evaluate the interest rate and the repayment tenure to align it with your financial goals.
4. Know about the charges
Before you decide on a loan refinancing, you must consider the costs involved. Even when you save on interest rates and EMI by refinancing, you still have to pay fees on the new loan. You must evaluate the various charges like processing fees, balance transfer charges, etc. Consider how much you would save in the long run.
You can use an online business loan EMI calculator to get an estimate of your new monthly payments.
5. Check the status of your current loan
If you already have a loan in your name, then a new loan might put a burden on your pocket. Even with a lower interest rate, you might be paying more than before. Therefore, you must consider your ongoing EMIs and the current loan’s outstanding balance before deciding on the new loan. Additionally, you must assess your capital needs and only borrow what you need.
Over to you
When done right, refinancing can be a wise choice for your business and can ease your financial burden significantly in the future. So, consider these points mentioned above to make an informed decision that benefits you in the long run.