Personal loan for business: Nowadays, the trend of taking personal loans for needs like medical expenses, studies or increasing business has increased considerably. However, taking personal loans for business may be a bit complicated. It is important to take care of many things in this. Here are 5 important things, which you should understand before taking a personal loan for business.
Fucking loan
The biggest advantage of personal loan is that it gets quick approval. Business loans have a lot of documents and long processes. However, personal loans can be found in a few hours. This is right for business professionals who require immediate money.
Loan without any guarantee
No property or guarantee is required to take a personal loan. This benefits new businessmen. But this is why its interest is more. The conditions of repaying the loan can also be strict, which can cause problems later. The interest rate can also change according to your credit score, loan duration and bank policy.
Loan limit is also important factor
Personal loans are easily found, but its maximum amount is limited. Most banks offer up to ₹ 10 lakh as personal loan, which is not enough for big business or expansion. Therefore, before taking a loan, correctly assess your need and ability to repay the debt.
Impact on credit score
Personal loan is connected to your credit score. Timely repaying the loan improves the credit score, but if you are not able to repay the loan, then your score may be bad. This can make it difficult to take a loan or credit card in the future.
Impact on tax
If you take a personal loan for business, then tax exemption will be given only when you can prove that the loan amount is in the business itself. For this, it is necessary to have the right document, otherwise there may be a problem in tax filing. You should consult a chartered accountant or tax expert, so that the personal loan taken for business can be shown in tax correctly.
Keep these things in mind while taking personal loan
- The interest rates of different banks are different. Check processing fees, foreclose charge and other hidden charges.
- EMI can choose long periods to keep short, but this increases the total interest. Decide the loan tenure carefully.
- Good credit score (750+), loan approval and helps to achieve low interest rates. First check your score.
- Take a loan only for essential works. Taking loans without need can increase the economic crisis.
- Not giving EMI on time can make the credit score deteriorate and also can also be penalty. So do repayment planning.
Also read: Bank Loan: Banks are hesitant to give credit cards and loans to Gen Z, what is the reason?