There is no dearth of loan providing companies in the financial market of India, but people are often confused between a business loan and personal loan in India. The difference between the two loans is that the latter is issued by a bank on behalf of an individual or business entity whereas the former is issued by individual or corporate bodies on behalf of the company. The former comes handy for those individuals who have huge investments but do not wish to risk their money in the stock market. This loan is also useful for business operators who need money for setting up new outlets or expanding the existing ones.
In simple words, the personal loan has become a sort of short-term investment tool for most of us. It is not designed for long-term transactions and is generally meant for making ends meet in between monthly salaries. This type of loan therefore has no use for huge purchases like cars or homes. Hence, it is imperative to analyze the pros and cons of business and personal loan India before deciding upon the latter.
A business loan is usually secured against your commercial property. While a personal loan is unsecured, it depends upon your credit history and ability to repay the borrowed amount within the stipulated time. As a result, if you have lost your job, or have had some financial problems in the recent past, then you stand a good chance of getting rejected for a business loan in India. Your chances of getting approved for personal loans depend upon your credit history, income level and employment history.
The interest rates applicable on business loans in India are generally higher than those of personal loans. However, the repayment period is generally shorter as well. You can get competitive rates from online business loan providers. You can compare business loan quotes offered by different financial institutions and lenders to identify the best deal.
Before opting for a business loan from any financial institution, you should first make efforts to improve your current credit history. The business loan rates will be affected due to your current credit score. To get competitive rates from the lenders, it is important to establish a good credit history over a period of time. Maintain a clean payment history with the bank and also keep the debt to income ratio in control. This will help you get a better deal.
There are certain things that you need to consider before opting for a business loan in India. First of all, you should look at whether the loan will be secured or an unsecured one. If you want a secured business loan, you will need to pledge collateral. However, if you opt for an unsecured loan, then you will not be eligible for high interest rates. Personal loan is another option, which can provide you the necessary funds at low interest rates.
If you compare business loan vs personal loan India, you will find many differences. However, the main difference is that a personal loan can be opted for a faster processing. However, there are many risks involved with it. If you want to use the money for further expansion of your business, then it is advisable to opt for a secured business . . . . . . loan from the lenders in India.
A business loan can be used for short term as well as long term requirements. It is up to the lending company whether they will approve the application within few days or many months. However, with instant approval, the money can be transferred to your business account without much hassle. If you want to expand your business, then you can opt for the secured business loan from the lenders in India. With this, you can increase the cash flow within a short span of time.