India’s healthcare industry is likely to reach Rs.8.6 trillion by 2022 from Rs.4 trillion of 2017, accounting for a CAGR of 16-17%. These statistics display the potential of this sector in India, and medical professionals can make the most of this opportunity with financial assistance like doctor loans.
However, before availing one, individuals should be aware of the unseen factors that can affect their doctors loan rate of interest.
Factors that can affect the doctor’s loan rate of interest
Following are a few factors that can change the interest rate of a doctor loan –
- Mistakes in the credit report
An individual’s records his/her repayment history, and lenders consider the same while approving a loan application. Therefore, any issues in this can result in the lowering of credit score, which can affect one’s eligibility to avail of the advance.
Borrowers who cannot meet the credit score requirement may not be able to negotiate a competitive interest rate.
Hence, it is vital to keep an eye out for the issues in the credit report and check it periodically. Individuals can download it from the official website of any credit rating agency, and if they find any mistakes, they can get back to them.
Moreover, keeping this report clean and devoid of any mistakes will help boost the CIBIL score. Also, a spotless credit report increases the creditworthiness of an individual and aids in making them eligible for doctor loans.
- Type of interest rate
There are two types of interest rates applicable to any financial product, fixed and floating.
- Fixed rates – Here, borrowers pay a pre-defined interest rate on their loan, which does not alter throughout the tenor. Even if the market rates change, this rate remains unchanged.
- Floating rates: This interest rate offered by financial institutions alters in tandem with the market rates. For example, if you have availed a loan against property at 8% initially, and with revisions of market rates, it comes down to 7.5%, you will then repay the loan at this current rate.
Therefore, the choice of type is one of the factors that decide the interest rate of new doctor loan.
- Location of the mortgaged property
Individuals who are planning to avail a loan for doctors against property should be aware of this pointer. Properties in prime locations with great amenities like good connectivity, nearby medical facilities, schools, market place, etc., have better valuation and demand.
Therefore, individuals mortgaging such properties can negotiate a better rate of interest from their financiers.
On the other hand, properties with a lower market value may not allow individuals to fetch a better interest rate.
- RBI’s policy changes
The Reserve Bank of India holds monetary policy meetings periodically and, based on the country’s current economic condition, alter key policy rates. For instance, in May 2020, the apex bank slashed the repo rate by 40 basis points to 4%. Moreover, in their recent monetary policy meeting, they have decided to keep it unchanged.
This factor plays a massive role in deciding the rate of interest on every credit instrument and on the overall budget doctors need to invest to start their own medical practice.
Apart from these unseen factors, leading financial institutions like Bajaj Finserv consider pointers like loan tenor, monthly income, overall credit profile, etc., to decide the doctors loan rate of interest.
Simultaneously, the company also extends pre-approved offers to its existing customers. The aim here is to streamline the application process and save time. These offers are applicable on both secured and unsecured financial products, and individuals can check their pre-approved offer online by entering their contact details.
Doctor loans are a multi-faceted suite of financial products offering varied benefits. It includes a loan against property, a personal loan, and a business loan. Therefore, individuals can opt for this financial product based on their requirements. Nonetheless, doctors loan rate of interest varies as per the choice of credit. Thus, borrowers need to check specific rates and plan their repayments accordingly to avoid any difficulties.