How to Choose the Right Loan
Every loan is unique in its own way, and not every loan is right for every situation. Before jumping in, ask yourself these 5 questions to see what type of loan your business requires.
Are you thinking about starting your own practice? Renovating an existing practice? Investing in an ultrasound machine or other costly equipment? Any aspect of improving (or starting) a practice that requires a large sum of money is likely going to require a loan. But which loan is the right loan for your situation?
Remember that not every loan is right for you—each one is different in its own way. To understand which loan to go after, you need to consider exactly what you need from it.
Ask yourself these 5 questions to see what your business requires.
1. How much money do I need?
You’re looking for a loan because you don’t have the funds you need for your business endeavor. But exactly how much do you need? Be flexible and realistic with the range that you’re asking your lender for—this is looked at positively by lenders.
Be aware of what the lender offers you after you ask for a loan. If the offer is too low, it most likely isn’t worth taking unless you think you can tackle your plans with less money. If the offer is too high, you may not be able to make the necessary payments. If you don’t have a way to make more revenue with this bigger loan, you will most likely end up paying more interest than you want or need.
2. How much does the loan cost?
Look at the interest rates to determine which loan option costs more. You should also ask your lender for the loan’s annual percentage rate. The APR gives you a much more accurate estimate of the loan’s cost because it takes additional fees into account. Know as much as you can about the costs of each loan option to make sure you’re able to afford it.
3. What is the term?
Some people prefer paying back loans quickly, while others prefer a slower process. Loans can be paid back over a period as short as 6 months or as long as 10 years. Ten years sounds like a long time and a ton of payments, but these types of loans usually come with larger amounts of money and lower interest rates. Compare and contrast each loan term to see what fits your budget.
4. How soon do I need cash?
When you need cash quickly, it can be more expensive. If you need a loan to open a veterinary practice, chances are you can take your time getting the loan. If you’re willing to wait, your loan could potentially be more affordable.
Lenders like to hike up the price of a loan if the borrower needs it quickly. If possible, plan your borrowing so you’re able to be more patient with the loan process. It could benefit your wallet in the long run.
5. Why do I need a loan?
Veterinarians need loans for all sorts of reasons—opening a practice, investing in a practice, covering late-paying customers, buying equipment or inventory. Know exactly what this loan money will go toward.
If the borrowed money is strictly for a one-time purchase, a term loan would make the most sense for you. If you’re instead buying expensive equipment or inventory, financing a loan might be the better option. There are many options to consider based on why you need a loan. Start exploring and researching to find your best option.