Demonetization, its Advantages & Points to Note
Everyone in India and abroad was surprised by the government's announcement to replace existing currency notes of Rs. 500 and Rs.1,000, which accounts for alm . . .
In a developing country like India, healthcare is an important and booming industry, which is expanding at a fast pace. More and more medical professionals are starting their own independent practice by opening their own clinics and diagnostic centers. Many are partnering to even start a hospital. For many reasons like buying land, inventory, machinery, hiring staff, etc., doctors need funding. Given how profitable this sector, lenders are happy to give loans to medical professionals. But owing to their demanding profession, doctors often find it hard to keep track of their finances. They often fall in the trap of committing a few mistakes while borrowing money that are completely avoidable. Here, we will talk about how doctors can make better financial choices while seeking funding.
What is a doctor loan?
Asthe term suggests, it is a tailor-made loan for medical practitioners. Meant to help the doctors set up their business or buy the modern equipment to maximize the accuracy of diagnosis or scale up their operations, these types of loans are usually collateral-free. The funding comes quite sooner as the medical professionals have hectic schedules and their needs are quite urgent. These loans can be categorized according to the specific purpose they serve. These include Business Loans, Medical Equipment Financing, Loan against Property, Physician Mortgage Loans, and Personal Loans among others.
Common mistakes that doctors tend to make while applying for a loan:
Not surveying the market for options:
“Who has the time?” comes the usual answer when medical professionals are asked why they never surveyed the market for better loan terms. However, it may take some time to research and analyze but one must have a clear idea how much loan one needs, how to use that loan to generate revenue, which lenders can give that loan at best interest rates, and how he/she plans to repay the loan comfortably. Without thorough research and planning, you will take hasty decisions that may not serve you well in the long run.
Choosing the wrong lender:
Don’t go to the financial institutions seeking a loan just because you have an account there or it is nearest to your home or office. Several financial institutions compete to get a doctor as their customer because of the humongous potential in the healthcare sector. Medical professionals should approach several lenders to compare the terms offered by them and then negotiate hard to get maximum benefits. Always prefer a lender who has experience in serving doctors and understands their financial needs.
Not opting for a customized loan:
In the umbrella term of doctor loan, there are subparts where the funding finances a particular requirement. If you want to buy machinery, don’t go for credit cards that charge high-interest rate but opt for Medical Equipment Financing, instead. Stay informed about your financing options and the advantages and disadvantages of each. Always go for a function-specific loan and not a generalized one.
Not checking loan terms and conditions:
Doctors usually need faster approvals and higher loan amount at low rates. Obviously, by surveying the market, choosing the right lender and opting for customized loans, you have ticked most boxes. Now don’t be complacent and read the terms and conditions carefully. You must do it to figure out if the lender has levied any hidden charges or if you have missed out any benefit.
Ignoring the term life:
Don’t lose sight of when you can repay the loan and get out of the debt cycle. So, pick your loan tenure carefully. If you need a small business loan to take care of a few immediate expenses, a shorter term works for you but in case you need to buy property, only a long-term loan will serve your purpose. You can’t spend all your income in an attempt to repay loans in a few years. You need to maintain a positive cash flow as well as make some savings as well. So, choose the tenure accordingly.
Most medical professionals either dread doing finance-related stuff or simply lack the time and patience to do it. While nobody expects them to be an expert in this area, a little awareness and research while applying for loans can go a long way especially when they can access exclusive benefits meant only for doctors. It may be cumbersome to manage your money matters at first but by investing some time in researching about the financial tools with respect to the medical sector can lead to taking more informed and advantageous decisions that will be great for your own (financial) health!
The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.