India is among the top 20 markets in the world for medical device sales. In 2020, this market stood at $11 billion and may reach $65 billion by 2024. This shows the growing demand and subsequent sales of medical devices in this country.
Since purchasing medical devices requires a significant investment, a customised medical equipment loan for medical professionals can help them in this regard. However, they need to know all about medical equipment loan interest rates before applying to avoid any unnecessary debts.
What are the types of medical equipment loan interest rates?
Financial firms offer customized professional loans to doctors or individuals planning to purchase medical equipment. However, before applying for such credits, borrowers must know in-depth about the associated interest rates.
There are two types of interest rates charged on professional loans to doctors on the purchase of equipment.
- Floating rate of interest: This interest is subject to change every quarter and is pegged to a base rate determined by RBI based on various economic factors. If there is a change in a base rate, then this professional loan interest rate will also alter accordingly.
- Fixed interest rate: This rate of interest remains fixed throughout a loan tenor. Such interest rates are generally higher than that of a floating interest rate. Resultantly, the total outstanding remains unchanged throughout the tenor, which also helps individuals in their financial planning.
Alongside the interest rates, one should also be wary of the factors that affect the interest rate applicable on this credit instrument.
Factors affecting medical equipment loan interest rates
Mentioned below are the factors to avail of the affordable interest rates –
1. Credit profile
A Credit score is one of the primary factors that impact a professional loan interest rate. Financial institutions check the CIBIL scores of doctors who apply for such credits. For this reason, having a good credit profile is critical to avail of a doctor loan to buy the best medical devices.
2. Debt-income ratio
A debt-income ratio helps to measure the monthly earnings against the fixed liabilities of a doctor. A borrower can calculate this ratio by dividing a monthly debt payment by gross monthly income. Ideally, the debt-income ratio should not exceed 50% of monthly income. It is one of the points that affect a professional loan interest rate.
3. Monthly income
To avail of any loan at an affordable interest rate, the monthly income of medical professionals plays an important role. Purchasing medical equipment is a costly affair that will require a borrower to be financially sound and stable.
Therefore, financial institutions will check the monthly income of an individual before approving any loan. The higher the income, the better it is for availing of such credits without any hassle.
4. Relationship with financial institutions
A relationship with a financial company plays a significant role in availing such business loans for doctors. This relationship depends on a person’s association with a particular financial firm, credit history with that firm, etc.
Moreover, leading financial institutions like Bajaj Finserv provide pre-approved to their current customers. These offers increase the convenience of a borrower by streamlining the loan application process. Borrowers can avail of these offers on financial products like home loans, personal loans, etc. Individuals can check their pre-approved offers by submitting their basic contact details.
5. Lender-specific eligibility criteria
Interest rates applicable on professional loans also depend on an applicant’s ability to meet eligibility criteria set by a lender. Some of these criteria are –
- MBBS degree with medical council
- BAMS/BHMS (2years from the date of medical registration)
- MDS/Dentist (5 years from the date of medical registration)
Taking all these factors into consideration and meeting a lender’s eligibility will thus help to avail of a loan for doctors at affordable interest rates. Individuals can also check the loan interest rate calculator to calculate their expected EMIs of this financial product.
Apart from knowing the factors that affect the interest rate on these financial products, one should also know the ways to lower the interest burden.
Ways to reduce interest burden
Loan prepayment: With prepayment, the principal amount reduces, which in turn decreases the interest burden.
Loan tenor: One can reduce the interest burden by opting for a short repayment tenor. It may increase the EMIs, but it will lower the overall debt.
Apart from a competitive medical equipment loan interest rate, this financial product also comes with repayment flexibility and a hassle-free loan application process. Hence, they help medical professionals to upgrade medical equipment and extend better service to the patients.