EDITORIAL
There’s more to a loan than interest rates. Four things you need to know! When it comes to considering your options for a loan, we’re conditioned to ask “What’s the interest rate?” Sure, interest rates are important, but there are actually 4 key things you need to know in order to make a good loan decision.
1. Costs = Rates & Fees
4. Financial Covenants
Rates are rates. But, fees come in many guises and can skew your effective rate. From monthly and annual fees to account keeping fees, line fees etc... The truth is, fees can often be one of the most annoying parts of your loan because they are often hidden and sneak up on you. Do remember however, that fees are often in place to support a particular service being performed by the lender on your behalf. Always ask for a fee schedule up front to avoid any surprises later on.
These are loan conditions, and on business debts this is particularly important as it often revolves around financial reporting. Do you need to have your financials prepped each and every year for your lender on their expected timeframe to review, assess and confirm you’re still a “satisfactory” risk? This has been more and more common with many lenders adopting this policy over recent years. Having worked with medical professionals for over two decades, at Credabl we recognise that if we had to micro manage a client and check in every year to make sure the practice is performing, we really shouldn’t be lending the money out in the first place!
This can hinder, or positively bolster your cashflow. Not all loans and lenders are created equal and at different stages of your career, the availability of cash can be vastly different. It’s ok to have a lender that works for now, and you’ll likely have another lender more suitable to your needs in ten years’ time. You want to ask for loan terms, any residual or balloons due at term end (particularly on asset finance) and of course the monthly repayments.
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2. Cashflow = Paydown Terms
The best ways to avoid unexpected costs associated with your loan, is firstly to stay on top of your loans and secondly, but perhaps most importantly, be selective with your lender. Dig a little deeper than the interest rate alone to uncover exactly what the cost of the loan will be to you and the ultimately value the debt is going to create for you and your practice.
Getting more from my finance partner, 3. Security = what else do you have to give up? means my patients get more from me.
Whether you’re new to seeking finance or ready for a review, we’re available to chat live on our website This is often a sticking point when comparing multiple credabl.com.au or you can call Deb, Ali or Ali in the lenders. Some will fund 100% of commercial property WA team anytime on 08 6280 1255, as we would be loansProfessional without anyand additional collateral. Others willtailored only for you personal finance solutions, and turned around fast. When you partner with happy to help! entertain suchyou a high to value ratio they have Credabl, canloan expect all that andif more. With a team of experienced finance specialists, we understand the practice, thesector tenant,soasyou security too.forward Remember the dental can look to finance solutions that help you get on with business and looking this shifts the dial significantly when reducing risk to after your patients. the lender so the benefit should be a better interest You always get more with Credabl. rate right? But again, not all lenders are created equal on this front either. Same goes for your residence, is credabl.com.au your home or investment property on the line too, or 08 6280 1255 instead? Or, does your spouse need to guarantee, are 1300 CREDABL (1300 27 33 22) they on the hook too? Most of our clients prefer to keep business and personal borrowings separate so it’s imperative to know all of this when making an informed decision for a financial partner.
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The issuer and credit provider of these products and services is Credabl Pty Ltd (ACN 615 968 100) Australian Credit Licence No. (ACL) 499547.
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