Complete Guide On Getting a CA Loan
Approximately 2.8 Lakh CAs provide tax consultancy services in India, wherein around 6.8 Crore taxpayers reside. Hence, chartered accountants are in high demand in the country, and owing to the difficult nature of the profession, the number of prospective candidates is just as limited.
Most individuals having completed their CA article ship can start their own accounting firm. A CA loan can be easily obtained at attractive interest rates for this purpose, used to meet all funding requirements of a start-up business.
Interest rates on CA loans in India
Most financial institutions in India offer loans for chartered accountants at a varied range of interest rates. Interest rates levied on such loans depend on the end-usage of the procured funds other than eligibility of the borrower.
Secured credits such as home loans or loans against property are extended at a relatively lower interest rate, as they are backed by a collateral guarantee. An unsecured CA loan, on the other hand, has relatively higher interest rates associated, as no asset is backing the procured funds.
What affects interest rates on loans for chartered accountants?
Several factors have a substantial influence on aggregate interest rates levied on such loans, which can be discussed as follows –
- Credit score
CIBIL score of a chartered accountant has a significant impact on the interest payable on professional loans. Having a high score establishes borrowers as trustworthy to the lending financial institutions. Thus, individuals gain negotiating power, allowing them to obtain funds at a reduced interest rate.
- Spending habits of borrowers
While availing a loan for chartered accountants, bank account statements of the past 6 months have to be submitted with an NBFC. Such documents reflect the spending pattern of an individual, along with repayment habits on purchases made on credits.
Chartered accountants having a healthy bank statement demonstrating timely payments on previous credits obtained, as well as standard spending patterns are eligible to avail such credits at competitive CA loan interest rates.
- Nature of loan
As discussed above, chartered accountants opting for unsecured loans have to pay a relatively higher interest rate on the same.
Secured loans obtained against a lien-marked asset, on the other hand, have relatively lower associated interest rates, as lenders gain ownership to the property in case of defaults.
Major financial institutions such as Bajaj Finserv offer both secured and unsecured loans for chartered accountants. They also provide pre-approved offers that make availing loans quick and easy.
Tenor of repayment
Even though it does not have a direct impact on interest rates on chartered accountant loans, loan tenor has a positive correlation with the total interest burden on availed credits. A more extended period of repayment implies an increased aggregate interest amount payable, divided among multiple EMIs.
A relatively shorter loan tenor is associated with more significant EMI payments imply reduced overall interest burden on such loans.
Following up on these pointers will help you to get the best CA loan interest rates. Funds obtained through such loans can be used to finance both personal as well as business-related expenses of chartered accountants depending on the loan availed.
You can finance your CA firm expenses through such credits. All costs relating to expansion, equipment purchases, or personal payments can be met through such CA loans respectively. Individuals can also finance the working capital needs of an existing business through such credits as well.
Chartered accountants having their own accounting firm is reported to have higher income through profits, allowing them to enjoy a higher standard of living. Only documents stipulating a 3-year work experience in this field and ownership of a property have to be submitted to avail such CA loans successfully.