A chartered accountant (CA) loan can help professionals establish self-owned firms or revamp their business set-ups. The absence of any end-usage restriction allows professionals to use such funds for any purpose, including or excluding their professional objectives. They can leverage this borrowed sum to finance wedding expenses, children’s education or any other requirement they have.
Financial institutions across India extend this CA loan at attractive terms, including long and flexible tenor, affordable interest rates, and simple eligibility requirements. Individuals must understand these determinants in detail to enjoy maximum benefits from this loan.
Factors to consider while applying for a CA loan
Here are some major aspects that CAs need to brood upon before opting for this professional loan:
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Required loan amountÂ
Professionals need to decide the exact amount they need to meet their financial requirements. This is because overborrowing can adversely impact and increase their financial burden. It may lead them to stretch their EMI amount or loan tenor unnecessarily.
On the contrary, one may fail to attain his/her objectives adequately by under borrowing. Resultantly, such individuals may need to take additional loans later. Therefore, they must align their loan amount with their professional/personal financial requirements before applying for the loan.
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Documentation
While taking this CA loan, professionals need to produce various documents, including Income Tax returns, bank account statements, property ownership records, etc. Therefore, individuals needing liquidity have to ensure that they have all their papers ready and updated to deliver them to lenders whenever required.
These readily available documents will help them curtail their loan processing time. In fact, they can avoid the unnecessary circumstance of refusal from the lenders’ end. In this regard, professionals need to be aware of all other ways that can ensure easy and quick CA loan approval.
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Up-to-date CIBIL score
The credit score is one of the crucial factors that the lending institutions check to understand that the borrowers will repay their loans and not default. In this regard, a healthy CIBIL score (above 750) is a prerequisite for getting this CA loan conveniently.
Professionals asking for advanced liquidity need to update this credit score to check it is above the benchmark parameter. Else, they need to be prepared to accept a higher interest rate on their borrowed capital.
They should also know and adopt necessary measures to increase CIBIL scores for CA. It will help them get their future loans more conveniently.
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Eligibility criteria
Every lender has an eligibility requirement that individuals need to meet to get the CA loan unfailingly. It includes age, credit score, annual gross income, nationality, experience in the profession, etc. Individuals can negotiate for a reduced interest rate by meeting all the eligibility criteria of their preferred lenders.
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Cost of borrowing
Although professional loan interest rates are the largest component of overall borrowing cost, it is not the sole factor that increases this amount. Several fees, including prepayment/foreclosure, processing, documentation, stamp duty, etc., inflate a borrower’s overall loan burden.
Therefore, individuals need to check these fees while applying for this chartered accountant loan. Apart from this, there are several questions they must ask themselves before fixing a lender for their CA loan.
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EMI affordability
Individuals need to set their monthly instalments according to their financial capacity. If they get an EMI higher than their affordability, they may face severe difficulties in effectively running all their financial obligations. In fact, they may miss their EMIs, leading them to bear unnecessary charges.
Furthermore, they will have to stretch their tenor with a smaller EMI amount for a chartered accountant loan. This will increase the overall interest outgo because the borrowing rate stays active for a prolonged repayment period. Therefore, CAs need to choose a balanced EMI amount at an optimum tenor so that can be they can repay effortlessly.
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Pre-approved offers
Individuals also need to check whether the lending institutions extend pre-approved offers. These readily available loans hasten the application process for advanced credit. In fact, chartered accountants can get a substantial loan amount at an attractive interest rate by accepting this special benefit. They need to submit their credentials, including names and contact details to check their pre-approved offers.
Hence, the CA loan can provide professionals with immediate financial relief. However, they must consider the above mentioned-factors to make informed decisions regarding their loan. It will help them get their loans easily and encounter a seamless loan repayment experience.
