Loans At The Right Time Can Change Lives
by Mashum Mollah Loans & Credit 27 May 2017
Understand What Loans Mean
A loan isn’t something you should pursue if you can foot the bill, but that’s not always going to be the case. What makes sense is finding solutions for loans which fit your business model, and which you will be able to sustain. You’ve got do your homework on this, but if you do, you can come out ahead.
One of the first things to do with a personal loan is determine where finances currently are, where you expect them to be, and whether you can pay the loan back in a reasonable amount of time. With loans, you’re going to have interest which accrues on itself. An interest rate that’s compound can become complicated.
You could be paying back a loan for years, because the compound interest continuously “dangles the carrot”, as it goes, before the “horse” paying off the loan—in this analogy, you’re the horse. Ideally, you want some method of payback in place that diminishes the period you must spend getting things repaid.
If you do have such a means of repaying that which you owe in mind, then you’ll have no trouble getting your loans paid off in time. So long as you understand this going in, then you can expedite your forward momentum in life quite substantially. Personal loans can be essential in securing a house or business.
Crunching The Numbers
Say you have a business which provides a necessary service to the community. Now say your projections put a minimum income for this service at $10,000 a month. But in order to make that figure, you need $50,000 capital for proper launch. Conceivably you could get everything paid back in five months, right?
Wrong. You’ve got collateral expenses that are definitely going to crop up. One example is overhead. If you’ve got a service that brings $10k a month in revenue, what is your actual profit? Well, if you’ve spent $2k producing the product or service, and $2k on employees purveying it, you’re at $4k expenses.
If your operational infrastructural costs (rental, electricity, water) are additionally around $2k, then of that $10,000, you’ve really only brought in $4k. If you secure a $50k loan, and are only able to pay $4k a month toward it, then you’re looking at about 12.5 months’ time spent repaying said loan, minimum, at $10k monthly revenue.
But there’s one more thing to consider: have you factored in your own needs? You’ve got food, groceries, gas, and other related living expenses. It’s safe to say that a business bringing in $10k a month would only be able to mete out $2k (or less) toward repaying a loan. That means it would take you a full 25 months to repay.
Now how much additional does your interest compound that payback? It depends on your credit, and what you were able to negotiate. If you’ve got bad credit, interest can be high. Good credit will have interest between 0.0% and 7.0%. But it may not apply until you’ve reached the initial term limit of the loan. Depends on the loan.
Finding Places To Secure A Loan
So the loan can help get you started, but if you don’t manage it properly, it can end up costing you. Still, getting a loan could be a wise choice for many businesses who need to get a foothold.
When you’re looking for the best bank personal loans online, you want solutions that, as Banking. Loans points out, “Bring your plans to life…and turn your simple dreams and little pleasures into reality.” The hope is, your business would increase in profit over time with such a loan, but it may not; so hope for the best, plan for the worst.