The rapid growth of MSME sector in India means there is a lot of financial lending activity going on right now. While applying for these unsecured business loans and working capital loans, entrepreneurs are often left asking for explanation of certain banking terms used by the lenders.
In this post, we are covering the commonly used terms by an online lender or an offline commercial institution, when granting business loans. An understanding of these terms will not only help you make an informed decision in the future but will also help you get loan approvals faster, as you explain your business loan preferences to the lender from the very outset.
The cumulative total of installments of loans already availed by you and still due in relation to your income.
The principal amount on which you are paying interest is reduced at the end of every year.
The principal amount on which you are paying interest is reduced at the end of every month.
The principal amount on which you are paying interest is reduced at the end of every day.
*The EMI you pay for a daily reducing rate is less than the one you will pay under a monthly reducing rate. Similarly, annual reducing rates will have the highest EMI.
A monthly installment has 2 components; the Interest component and the Principal. Amortization schedule shows the amount of interest and principal you will be repaying with each payment.
It means making an early repayment of the loan to reduce the tenure as well as the interest of the loan. Non-banking financial companies like Lendingkart, do not charge pre-closure fees.
An equated monthly installment is a fixed payment from the borrower to a lender on a specified date of each calendar month. EMIs are used to pay off both interest and principal (see Amortisation Schedule).
If you are looking for a quick business loan, visit us at www.lendingkart.com or download our app on your smartphone.
You might also like these
How to Check and Improve CIBIL Credit Score for Business Loan?
How to Check and Improve CIBIL Score/Credit Score for Business Loan? Banks and other financial institutions rely heavily on the CIBIL Transunion Score of a person to judge his/her creditworthiness, based on which the credit is disbursed to the borrower. The score typically ranges between 300 to a higher limit of 900. A score that …
Khadi and Village Industries Commission (KVIC)
Overview: KVIC is a statutory body formed by the Government of India under the KVIC Act of 1956 that aims to nurse employment and economic uplift in rural India. The term Khadi goes back to the Swadeshi Movement launched by Mahatma Gandhi in 1920 by propagating the use of hand-woven and home-spun fabrics. It was …
CIBIL Score for Business Loan – Check Minimum Credit Score
Minimum CIBIL Score for Business Loan Businesses require huge amounts of money. Risk-taking entrepreneurs stake their lives and careers on the line to start companies. These businesses and the job opportunities they introduce to the economy are part of the economic lifecycle. Loans fuel such businesses and good loans with attractive interest rates enable people …