Your credit score plays a crucial role in how easily and affordably you can access credit. Whether it is a medical equipment loan, a chartered accountant loan or any other professional loan, a majority of lenders check this 3-digit score.
Your credit score determines your creditworthiness and gives lenders an idea of the risk you pose as a borrower. A high credit score makes you a low-risk borrower, i.e., someone less likely to default on repayment.
As such, lenders offer you a higher loan amount at an affordable cost. This is especially pertinent to a medical equipment loan, which usually involves a substantial loan amount. So, read on to know how a high credit score of 750 and up helps you avail of the loan with ease.
Enjoy Speedy Approval on your Medical Equipment Loan Application
Whether you have been practicing independently for a long time or are just establishing your clinic, you know that the right medical equipment is key to providing good healthcare services.
While India manufactures many economically priced devices, expensive equipment like ventilators and stents are imported. This drives up their price and may add to your financial burden.
Buying all the required instruments, be it dentistry chairs, 3D mammography machines or Doppler ultrasound equipment can add up to a big expense. This is where you can rely on a medical equipment loan to purchase all the needed instruments.
This loan is secured against the devices you buy, and you can leverage a good credit score to benefit from quick approval of your loan application.
A good score assures your lender, be it a bank or an NBFC, that you not only have experience with credit but have also repaid it responsibly in the past. With an excellent credit score, you can not only boost your chances of approval but also get access to credit faster.
Other Benefits of a Good Credit Score
Apart from speeding up the process of getting the funds you need in your bank account, here are the other advantages you get with a high score.
Obtain More Financing
With the rising cost of medical equipment, getting sufficient funding to lease or purchase equipment is vital. After all, the latest technology can help you cater to your patients better, whether you use it to investigate issues, treat patients, monitor vital signs, or more.
To get sufficient funds for state-of-the-art medical equipment, make sure your credit score is high. While lenders offer up to ₹10 Crores via a medical equipment loan, getting an ample sum is about all meeting their eligibility criteria.
While some of this has to do with your professional experience, degree, and finances, a lot hinges on your credit score. A high score allows you to get a higher loan amount so you can rely on the best equipment to treat your patients.
Get the Freedom to Structure Repayment Your Way
Usually, you get a repayment window of 3 months up to 84 months when you take a medical loan to buy equipment. With a good credit score, you can choose a longer tenure to repay your medical equipment loan. This makes it easier for you as your EMIs are split over time.
However, lenders are hesitant to offer longer tenures to unreliable borrowers. Thus, a good credit score helps you improve your creditworthiness and get the freedom to choose the tenure as per your finances.
Enjoy a Higher LTV Ratio
The loan-to-value ratio is the maximum amount of financing you can get against the total cost of the equipment you plan to buy.
For instance, say the total cost of medical devices you need is ₹1 Crore. However, due to a low credit score, you may get an LTV of 70%, which comes to ₹70 Lakhs. This means you will need to finance the remaining cost of ₹30 Lakhs on your own.
A high credit score helps you get a higher LTV ratio, as lenders generally offer up to 90% of the cost of equipment as a loan. To get the maximum financing, maintain your score, apart from meeting the other eligibility parameters.
Benefit From Affordable Interest Rates
Lenders charge high-risk borrowers a higher interest rate to cover their risk. With an excellent credit score, you can not only get financing offers from a range of lenders but also get the most nominal interest rate.
Since a high score exhibits financial diligence, low utilization of credit in the past, and low or no existing debt, lenders are more likely to offer you a competitive medical equipment loan interest rate. Such a score also helps you negotiate for a better rate if you have multiple offers.
Finally, an affordable rate helps you repay stress-free as it directly impacts your EMIs and total interest dues.
Tips to Improve Your Credit Score
With perseverance and discipline, you can improve your credit score to get a medical equipment loan from any bank or NBFC. Here are a few tips that can help you improve your score.
- Repay all your credit dues on time, be it credit card bills, loan EMIs, or more
- Monitor your credit report periodically and correct any errors that may reduce your score
- Consolidate existing debts and pay them off to secure a higher loan amount and boost your score
- Reduce your dependency on credit and control your credit utilization by keeping it to 30% of your total credit limit to increase your score
- Diversify your credit profile by taking a mix of secure and unsecured loans
- Don’t apply for too much credit at the same time from different financial institutions
With these tips, you can boost your credit score and get a medical equipment loan on pocket-friendly terms. With affordable funding, you can invest in new devices and upgrade to the latest technology hassle-free!