As per the official report from the Finance Department of India, professionals like doctors and lawyers are also eligible for funds under the Special Credit Guarantee scheme for small and medium enterprises (SMEs). As per the new definition of MSME, the annual turnover ceiling is Rs.100 crore.
Under this scheme, a loan amount of Rs.1.36 lakh crore had been sanctioned till July 2020. However, to be eligible for this credit, they need to fulfil stringent eligibility criteria. Therefore, alternatively, individuals can opt for a professional loan for doctors from NBFCs or any other financial institutions.
Nonetheless, before opting for such credits, doctors need to avoid a few mistakes that most individuals make while availing this credit.
5 common mistakes while availing a doctor loan
Like any other credit, a doctor loan is also a financial liability that borrowers need to manage efficiently. Failing to do so can lead to irregular repayments, hampering one’s credit score. Borrowers can also end up landing in a debt trap.
Here are some major mistakes one need to avoid while opting for this credit.
- Not estimating the fund amount required
It is vital to assess the financial requirement before opting for a loan for doctors. It would eliminate the risk of over-borrowing or under borrowing. In the first instance, potential borrowers have to carry an additional EMI burden when they do not need it. For the latter, the purpose of borrowing is not fulfilled. Hence, it is imperative to formulate a comprehensive plan before approaching a lender.
- Unaware of repayment structure
While opting for a doctor loan is one of the ways doctors make their practice more visible, not knowing the repayment structure can prove to be fatal for one’s financial wellbeing. Thus, before applying for this credit, borrowers need to know the interest rates, EMI payable, the tenor of a professional loan for doctors. They can also use a doctor loan calculator that provides an estimation of all these components, accurately.
- Ignoring credit score
Credit score plays a crucial role in determining the eligibility for a professional loan. Since it indicates the repayment capability of a borrower, one needs to check this score before applying. For instance, a score of 750 and above is considered a standard to be eligible for the funds.
Moreover, lenders offer favourable terms to those with a high credit score. They can also follow some tips on what should doctors with low credit score do if they do not have the score necessary to avail the credit applied.
Along with this score, doctors also need to submit several documents and other requisites necessary to avail this fund.
- Selecting lender without comparing
Selecting the right lender is as vital as checking one’s eligibility. Several lenders are available in the market, and thus borrowers need to conduct ample research to choose the best one.
A selected financial institution like Bajaj Finserv offers different types of loans for doctors, depending on the requirement. They also provide a flexi loan facility that helps in saving on EMI payment.
The NBFC also extends pre-approved offers that simplify loan processing and makes it prompt. Such offers are available on various loan products such as business loans, personal loans, credit cards, etc. You can check your pre-approved offer instantly by entering your name and mobile number.
- Overlooking additional charges
Lenders often charge additional fees on credits availed, such as processing fees, foreclosure fees, part-payment fees, etc. When added, they can amount to substantial charges. Thus, borrowers need to talk with their preferred lender about such charges if any. These are some of the factors that doctors need to avoid while opting for a professional loan for doctors. Moreover, they should also need to know about the latest technology and equipment to channel the funds availed in the right direction and expand their professional venture a step further.