Starting a CA company requires a large amount of money that has to be invested in various factors. Most of the time people involve investors that provide funds for the company and expect stakes or profit from the company in return. Since investor’s interference can be troublesome, there is an alternate way which can be used to finance your company. To fund your CA firm, you can take the help of loan offered by a money lender.
Chartered accountants are well versed with the banks, and its terms, due to which they are familiar with the various lending products offered by the banks. As their financial interactions are only limited with the banks, very few CAs know about NBFCs. Sometimes CAs also get reluctant and confused while applying for a loan. The lending products offered by the banks are limited and might not suit the needs of the applicant. In such situations, a Chartered Accountant loan can be their last resort.
What is a CA loan?
A CA loan is a customised lending product made only for chartered accounts. It is a type of professional loan but has different and many suitable terms for a CA. Moreover, due to the lack of security interim, it makes it even easier for people to apply for a loan.
Things to consider when applying for a CA loan:
A Chartered Accountant loan can be beneficial for CAs due to its terms, but if you do not apply for it in a proper manner, your loan application might end up getting rejected even affecting your credit score.
Credit Score: Due to the lack of security interim the lenders are in a risk about the repayment of the loan. To avoid providing a loan to regular defaulters, the lenders refer to the credit score of the borrower. The credit score is points given to a borrower based on his previous loan repayments. 750 points are the ideal credit score for a personal loan approval. If you have a credit score lower than 750 points, the lender will reject your loan application. People with low credit score can apply for a loan through the Non-Banking Financial Companies (NBFCs). NBFCs offer loans for the applicants with slightly lower credit score with perks better than most of the banks.
Eligibility Criteria: For the loan approval, the lenders have certain parameters that determine the loan eligibility of the applicant. CA loans eligibility criteria has factors like income proof, employment history and credit score. To get the loan application approved, the borrower must qualify of all the parameters set by the lender.
Loan terms: Loan terms like interest rates, tenor, EMI and Miscellaneous charges can have a major impact during the repayment. Interest rate plays a vital role in a loan; it is an amount that is charged by the lender and has to be paid along with the loan repayment amount. The interest rate of the loan is calculated as a percentage that is applied to the loan amount to be repaid and is calculated on a yearly basis. It is necessary that you look for a lender that offers a low-interest rate on CA loans. The tenor is the second important factor that completes a loan. The tenor is the duration within which the borrower has to repay the loans. EMIs or Equated Monthly Instalments are monthly payments that the applicant has to repay on a monthly basis for the repayment of the loan. Miscellaneous Charges like processing fees and pre-payment charges also play an important part in the loan repayment. These charges can range from few thousand to even lakh. Hence it is important that you check these charges before applying for a loan.
Chartered Accountant loan is a type of professional loan; So, you have to keep the above-mentioned things in mind while applying for a CA loan.