What is business refinancing?
Refinancing business loans mean taking another loan with the same lender while paying off the existing loan. The new loan will be at cheaper rates and flexible terms and conditions. And, if you avail a new business loan, you can pay off the existing one with the amount and start with EMIs for the new loan.
Most of the borrowers forget about the loan once all the EMIs have been paid and the tenure ends. But some of the business owners want to upgrade their loan with the growth of their business.
Another reason for refinancing is the need for more funds even after availing the loan and during its tenure. Refinancing business loan may allow availing a business loan at a low interest rate and at much better terms and conditions.
Things to consider before going for loan refinancing:
1. First, know whether the lender offers such loans
Before putting your time and efforts to go for another loan, make sure your lender provides this facility. Because if your lender does not, in such a case you won’t be able to go for refinancing.
2. It might affect your CIBIL score
Every loan affects the CIBIL score and refinancing also will. So it is important that you consider this since it can affect your CIBIL negatively as well.
3. Compare the interest rates
The next thing to consider is the interest rate at which the loan is offered. Refinancing takes time and the lender might give a refinancing loan at higher interest rates which will not be beneficial. It is ideal to go for refinancing at lower interest rates to lighten the burden of EMI.
4. Consider where your current loan stands
If you are having difficulties paying the current loan, availing a new loan will only increase your troubles.
But if you want to merge the two loans, and extend the tenure of the loan, the EMI will also lower down which will be helpful. If you want to save money, the refinancing loan will not be a good option since new interest charges would be added.
5. Know about the processing fee
Availing a refinancing loan means availing a new loan. So processing fee, file charges will be taken again. Therefore, it is advisable to check the EMI calculator so that you know the EMI amount.
If you want to take a loan to increase your business, contact Gromor Finance for quick loans at attractive interest rates!