Repayment is the most important step in the whole loan availing process. The lender approves a loan only after being sure that the borrower can repay the loan amount on time. The repayment includes both the principle and interest.
Not repaying the loan on time can increase the debt level and also affect your credit score which will make it difficult for you to avail a loan in the future.
The 3 modes of repayment that will make repaying a business loan easier:
1. Standing Instruction
Standing instruction is used when you have a savings account so that you can access the account to withdraw the EMI you owe to them automatically. It is a hassle-free process and happens each month.
The date of withdrawing the EMI can be specified to the lender, you just need to have funds in the account to make sure any EMI is not missed so that you do not miss on the repayment process
2. Post-Dated Cheques
Post-dated cheques of the loan amount are given to the lender which the lender will submit to the bank on the specified date.
It is also like standing instruction, but here the cheque has to be physically sent to the borrower’s bank instead of the funds that are withdrawn electronically.
3. Electronic Clearing Service
This option can be used when you do not have an account in your lender’s bank.
This mode can be used if you don’t have an account with your lender bank. Here also, the borrower will give the lender access to take the EMI from your account. The lender will then provide the signed consent form and canceled cheques to your bank who will approve the transaction of EMI from your account.
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