Test Clinical Consult Series - Episode 1
Before taking out a loan, ask these 8 essential questions
Taking out a loan is a major financial decision. Whether you own a medical business or are an employed physician, you may need financing for continuing education courses, investing in technology and equipment, funding new initiatives or growth and expansion. Not all lenders or loans are created equal. Asking the right questions in advance can help you find the best solution.
Do you require personal collateral
One of the biggest disadvantages with many loans is that they can be challenging to obtain unless you have valuable collateral. Although some lenders require it, others do not, enabling you to safeguard what you own. You worked incredibly hard to acquire your assets — are you really willing to risk them?
Will this loan show
up on my credit report
Applying for a loan could put your credit score at risk. During the application process, some lenders will do a hard credit pull, which provides a full report of your credit history and credit score. This type of inquiry can hurt your credit score and stay on your report for up to two years. Other lenders perform a soft credit pull, which neither affects your credit score nor ends up on your report.
What type of rate do you offer
Loans will have either a fixed rate or variable rate. This dictates whether the rate will stay consistent for its entire term or will fluctuate based on market conditions. With a fixed rate, you will always know what your interest costs will be, making your payments and monthly budget more predictable.
How soon do you make approval decisions
Establishing the approval timeline can help you anticipate whether the process will take days, weeks or months. This is critical if you urgently need funds.
Do you have experience working with others in my industry
Physicians have unique needs, so partnering with a lender experienced
in the industry matters. Some lenders have a process that does not differentiate a physician from any other borrower, whereas others specialize in working with physicians or with customers whose profiles are similar.
Each lender or loan is different. Understanding the fundamental components can help you confidently evaluate loan quality and overall experience. By examining a lender’s expectations about timelines, deliverables and expertise, you will decrease the risk of surprises.
How quickly do you fund upon approval
Some lenders can take weeks or months to deposit funds into your account after loan approval, whereas others can do so in days. If you need funds by a certain time, ensure the lender’s timeline aligns with yours.
How long do I haveto repay what I owe
The length of your loan dictates how much you will pay each month. Longer terms typically mean your monthly payment will be lower and more manageable. If you need more monthly cash flow, look for a loan that offers longer payback terms.
What is your application process
As a physician, you deal with a large amount of paperwork. Your time is valuable, so find out how much may be required for the application process. Knowing in advance what paperwork you need to provide can help you estimate the time you will need to commit.
Chris Panebianco is chief marketing officer for Bankers Healthcare Group, a provider of financial solutions for physicians. Send your questions to mjhlifesciences.com.