Archive for February, 2010
Business Factors That Determine Your Loan Rates
February 18th, 2010 | 
Author: Business loan rates aren’t a figure that your local lender just thinks up arbitrarily. Loan rates are determined by very specific criteria that tell the bank how much to charge you in interest, based on the assessed risk of the loan. The risk of the loan is determined by several factors: the strength of your business, how much you want to borrow, whether it’s secured debt or not, the term to complete the loan, and your credit history.
Good Business Means Better Rates
If your business is in trouble, you’ll have trouble getting a loan, even if that’s when you need it the most. Lenders will only invest in businesses that are doing well, and that means getting those lines of credit set up when times are good. If business falls off, hopefully, you’ll already have some way to obtain funds.
Your Loan Amount
The more you want to borrow, the more you’ll be scrutinized. The higher amounts lead to much higher risks for lenders, especially if you’re a new client. If you want to build up to larger amounts, get cozy with a lender by borrowing and paying back smaller amounts first. The fact that you are a long-standing customer will give them more trust in your willingness to pay them back.
Collateral
Even if you want a large amount, you can get it by putting up some form of collateral. Your home equity, your savings, or some other type of asset can be used to secure loans with higher debt. Unsecured loans are typically going to be of lower amounts and carry higher interest rates.
Your Term
The longer the term, the lower the interest rate, however it’ll cost you more to finance over all. You can play around with the term to see how that affects your interest rate, but try to pay back any loans as soon as you can, to avoid overpaying over numerous years.
Your Credit History
Some loans will require a spotless credit history, and other loans, like merchant loans won’t even pull a credit history. It all depends on what type of loan you want and how you are securing the loan. Loans that pull a credit history can have lower rates, but not necessarily if your history is bad. In that case, you may want to look at no credit check loans to avoid being penalized for a bad credit history.
