When it comes to raising unsecured finance for your chartered accountancy firm, a credit card and a Flexi Loan both appear to be viable options, as they are easy to access and provide you the funds that you need. However, it is worth spending a few extra minutes deciding which option suits your needs more closely and is more beneficial too.
Take a look at the questions that you must answer to make a smart decision.
Why do you need external finance?
Firstly, look into the needs that demand finance from an external source. Do you need funds to pay monthly bills such as rent, utilities, salaries, etc.? Or, do you need funds to hire a team of expert consultants, take care of expansion costs or refurbish your office with newer computers and software? For the former, choosing a credit card makes more sense as the expenses aren’t significant. But, for the latter, where you have to take care of sizeable expenses, a Flexi Loan comes handy.
How much money do you need?
Since a credit card is ideal for everyday expenses, it may or may not come with a high credit limit. Factors such as your spending habits, debt to income ratio and past credit behaviour will determine this. On the other hand, a Flexi Loan assures you a high limit, no matter which loan you opt to avail as a Flexi Loan.
For instance, when you take a Loan for Chartered Accountants from Bajaj Finserv, not only can you get over Rs.35 lakh in your account within 24 hours, you can also avail a Flexi Loan as a personal loan, business loan, home loan or loan against property. While a personal loan or business loan will give you up to Rs.35 lakh, secured loans will fetch you up to Rs.2 crore. This means that you can take care of a plethora of personal, as well as business needs with equal ease.
What is your repayment capacity?
Before you avail credit in any form it is imperative that you have a repayment strategy in place. Here, it is important to note that a credit card gives you access to funds quickly, but it carries a short repayment window too. Typically, you must repay your bill in full each month. If you fail to do so, you will have to pay a hefty interest on the amount that you owe your credit card company. On the other hand, a Flexi Loan, as the name suggests, is far more flexible. You can choose a tenor of up to 60 months as per your financial situation to repay the loan. So, you can choose a short tenor if you want to clear the loan quickly, or opt for a longer tenor to benefit from lower monthly payments.
What is the rate of interest?
Any source of finance is as good as the cost-effectiveness that it offers. If you avail credit with a high rate of interest, it will increase your monthly outflow and cause more problems instead of alleviating them. In this regard, credit cards are notoriously expensive, especially if you withdraw cash using one, or don’t pay your bill in full. On the other hand, loans aren’t as rigid and certainly carry a lower rate of interest. This makes them more affordable from the get-go.
To be absolutely certain of how much the loan will cost you, you can use an EMI calculator and forecast your monthly payments even before you apply. Besides, when you avail any loan as a Flexi Loan from Bajaj Finserv, you end up spending up to 45% lesser than you would otherwise.
Make a smart choice
Take a look at this table to understand the difference between a credit card and a Flexi Loan at a glance.
|Parameters||Credit Card||Personal Loan|
|Financing Objective||Short-term needs||Long-term needs|
|Ease of Repayment||Low||High|
|Rate of Interest||High||Low|
|Scope of reduced monthly expenditure||Low||High|
With this information in hand, make a wise decision when it comes to raising finance for your CA business. It will help you make a smart decision, and ensure that a lack of funds doesn’t hamper business productivity and growth.
To apply for a Flexi Loan for CAs from Bajaj Finserv, click here.