When it comes to buying a piece of heavy equipment, it is quite possible that you might find yourself to be short in cash. A loan might appear to be an easier and quicker option to finance your purchase, but you have to find a loan option with minimum processing fee and lowest rate of interest. Here are the top questions to ask when you are trying to get a loan for heavy equipment purchase.
1. How much interest rate do you charge?
Many banks offer such loans at a lower rate of interest. Borrowers who are already customers of banks can obtain loans at comparatively lower rate of interest. A few banks tend to offer loans at lower than 9.5% p.a. interest rate.
2. Up to how much do banks finance?
Try not to take a loan from a bank that charges EMIs which take up over 20% of your monthly income. If you pay a higher amount in Equated Monthly Installments every month, it can put your finances under strain.
3. How much do I have to ultimately pay for the heavy equipment?
Use a loan EMI calculator to determine the final amount you will be suppose to pay over time, for payment default, late charges, foreclosure, prepayment, documentation, processing fees and more.
4. How much down payment will I have to make?
Payment for a heavy equipment loan is supposed to continue for some time, and you need to pay EMI regularly for a few years. Do not choose a higher repayment period, as it will make the payable interest rise on the amount of loan.
5. Which fees do heavy equipment loan include?
These fees typically include charges for bounce, swap, loan cancellation, amortization schedule, late payment, foreclosure, part prepayment, stamp duty, registration certificate collection and more. Prior to choosing a lender, you need to compare the charges and additional fees of different banks.
6. Is it possible to make premature payments with no penalty?
A number of banks levy foreclosure charges, prepayment charges and other fees when borrowers wish to pay debts off before the end of term. Always pick a bank that charges the least when you wish to pay before the term ends.
7. Which supporting papers do I have to pay for a heavy equipment loan?
For loan sanctioning, you might have to show various documents such as KYC documents, Bank statement, Partnership deeds, Employment stability proof, Business stability proof etc.