What advantages do professional loans have compared to standard personal loans?

Sufficient funds are crucial in ensuring smooth operations in your practice. Getting a loan is one way to bridge financial gaps, and many professionals are taking this route. In fact, as a professional, there is no dearth of options when it comes to financing solutions. Professional loans offer customised funding, depending on your profession and requirements. But, a personal loan for doctors or other professionals offers funds without restrictions. This enables you to use the funds as needed, without any hassles.

 While you may think that this makes a personal loan a better option, there are certain benefits of a professional loan for CA or other professions that make it a smart choice too. Understanding these is key to choosing the best option. 

 Read on to know these benefits of a professional loan over a personal loan and make an informed decision.

 Advantages of Professional Loans Over Personal Loans

 Get Affordable Financing

When comparing any credit options, the first factor that you need to look at is the interest rates. This is because interest rates influence your borrowing cost. With a higher interest rate, you will have a higher interest outgo, even on a shorter tenure. 

 Generally, personal loans have a higher interest rate as compared to professional loans. As such, choosing the latter is a better, and more cost-effective option. To put this in perspective, here’s an example. 

Consider that you have taken a personal loan for doctors for ₹10 Lakhs at an interest rate of 12% with a repayment tenure of 5 years.

With these terms, your EMI will amount to ₹22,244 and total interest payable will be ₹3,34,667.  

Now consider a professional loan for the same amount and tenure. However, at an interest rate of 10%. Here, the EMI amount will be ₹21,247, and the total interest will reduce to ₹2,74,823. 

As you can see, the difference in EMI is marginal, but the difference in total interest paid is not. This makes professional loans a more cost-effective decision. 

Secure High-Value Funding

Today you can get anywhere between ₹50,000 to ₹55 Lakhs as a professional loan for CA or other professions. But, if you take a personal loan, the maximum amount you can get from the majority of lenders is around ₹40 Lakhs. 

The additional ₹15 Lakhs you can get from a professional loan can help you better manage your expenses from one source, easing your worries about looking for other means. Moreover, you may need to meet stringent eligibility criteria to avail of a higher personal loan amount. 

 However, the eligibility criteria for professional loans are relatively simple and easy to meet, even for a higher loan amount. This gives professional loans an added advantage over personal loans. 

 Leverage Longer Tenure Options

Longer tenures are especially beneficial when you borrow a high amount. This is because it reduces your EMI amount. Since establishing or expanding a practice can require you to borrow a higher amount, longer tenure options are feasible for easy repayment. 

 With a professional loan, you can enjoy up to 7 years or 84 months of tenure. At the same time, the maximum term offered by the majority of lenders for a personal loan is 60 months. Here’s an example to help you understand the impact of your tenure.

 Suppose you take a loan of ₹15 Lakhs at an interest rate of 11%. If you take the tenure as 60 months, the EMI amount will be ₹32,614. However, if you increase the tenure to 86 months, the EMI amount comes down to ₹25,684. 

Remember, a longer tenure also means an increased interest outgo. You can use an EMI calculator to choose the most feasible option.

 Enjoy Customised Borrowing

Personal loans are designed to cater for customers from all backgrounds, salaried, self-employed, or more. As such, it offers standardised benefits that fit the general requirements of anyone who applies.  

Professional loans, however, offer customisation to fit your profession and its related requirements. You can apply for a specific amount dedicated to your expense based on your field. For example, doctors can use it for medical equipment loans to get 95% loan amount of the total equipment cost. 

On the other hand, CAs can take professional loans to fulfil different requirements, such as paying overhead costs or meeting working capital requirements. This ensures that instead of a one-size-fits-all loan, you get a specific borrowing experience, enabling you to get more benefits from your borrowing. 

 Collateral-Free Credit

You can get a professional loan for CA or other professions without pledging any of your assets, depending on why you apply and the lender you choose. This enables you to get the funding you need without the risk of losing your asset. While this is also a benefit with personal loans, you may not get the same quantum of funds without some form of collateral. 

 Tips to Choose the Right Professional Loan

When you borrow funds, you pay a cost and take on the responsibility of repaying it on time as per the specified terms. If you default on repayment, you hurt your creditworthiness and your eligibility to avail credit in future. This can ultimately impact your financial wellbeing.

Given this, choosing the right option becomes critical. Here are a few things you should look at when applying for a professional loan for CA, doctor, or any other profession.

  • Compare the interest rates offered to minimise your borrowing costs
  • Asses the maximum loan amount and tenure provided to get the funding you want
  • Consider additional costs, like processing fees, for a holistic idea of your borrowing costs
  • Use an EMI calculator to optimise your loan as per your current and future finances
  • Read the fine print to know about hidden terms and cost for a smooth repayment
  • Look for special offers that enhance the value of your borrowing

 In conclusion, with a professional loan, you can leverage your degree and get better funding for your practice. Moreover, it is easily available online, just like a personal loan for doctors and other professionals. 

After choosing your lender, all you have to do is to fill out a simple online application form. Remember to check the lender’s eligibility and other requirements to have a seamless application process.

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