How to Prepare your Loan Repayment PlanAbbakin
In order to secure the required outside business or personal funding you need, here are some tips on how to prepare your loan repayment plan successfully and be able to attack your debts head on.
Individuals, entrepreneurs and organizations need to sell their projects successfully to potential investors and/or financial lenders by discussing their feasibility reports, business plan while preparing their loan applications.
For a loan borrower similarly, it’s easy to forget about the fact that you might have some bad debts looming over your personal credits, business assets, or home property.
Therefore, you need a plan on how to attack your debts ahead, and keep a clean slate as you perpare the countdown to loan repayments.
What is a Loan Repayment Plan?
Loan repayment plans are arrangements made by financial institutions or lenders to help borrowers manage their loan accounts. Some times, it may be a form of checklists of what to do or the processes involved.
Depending on the lenders, loan repayment plans can have distinct requirements which may result in the borrowers paying less interest over time, or offering greater benefits such as loan forgiveness.
So, below are some tips on how to prepare your loan repayment plan successfully.
5 Tips on How to Prepare your Loan Repayment Plan
#1. Determine Your Loan Amounts
First thing first, try reaching out to your loan officer or lender and ask the right questions about any aspects of your loans that confuse you.
You need to understand the exact loan sum you’re expected to pay at the end of the day.
Make sure you’re cleared on what you owe, how long your loan period is, and what your monthly payment schedules should look like.
Loan Sum = Principal + Interest
#2. Create Clear Connections
Ensure you use the correct contact details in your loan application processes.
Update your contact information so you’re sure to receive your bills, transactions, phone calls and emails messages from your leading entity when necessary.
You will use the information you have received from your loan officer to seek out financial advice throughout your repayment term.
#.3 Setup Your Budget
If you’re a business, calculate all your earnings or incomes, and map out all the money coming in and going out from your financial accounts.
This could include money for your salary, rents, car payments, foods, recreation costs, transportation, daily operational costs, fuels and more.
Now, factor all your expenditures in an estimate of your loan payment, and decide how much you will be comfortable paying each month.
This will keep your spending in check and help you put out some amount of money away, so you don’t miss the loan money once it’s time to pay.
Remember, accrued interest or service charges may capitalize at the end or be added to the principal of your loan, which increase your debt weight.
#4. Choose the Right Repayment Period
Many banks or financial lenders don’t just look at the size or needs of a loan; they also consider the cost of the funds and the tenor or the length of time for which the money are required.
This is should also be one of your very important considerations.
The standard repayment for a personal or business loan could run from 1-3 years, 1-5 years, 6-10 years, and more if its going to be merchant or mortgage loans.
In the short-term money market, rates of funds or interests are relatively lower than those on longer-term investments.
Be ready to explore the effects of different repayment periods, extra payments, and interest programs; and choose the best period that suits you.
Also, think about utilizing resources at their best if you are visualizing a long-term borrowing.
#5. Consider a Loan Repayment Plan with Different Structures
Many loans, whether personal, student, mortgage or business loans are repaid by using a series of payments calculated over a period of time.
You can propose a repayment plan that has different structures such as:
- A line of credit – payable at your discretion but subject to renewal annually by the lender.
- Term loan – payable monthly over ___ years starting on ____ date.
Wrapping Up: How to Prepare your Loan Repayment Plan
If you would like to discuss loan repayment plan options or change your repayment plan. You can get more information from your loan service provider or visit their websites for loan calculators if available.
In addition to information about loan packages, most online and offline loan providers have loan calculators on their website.
When taking the investment decisions, remember to factor the principle elements in financing
Loan Cost = Principal + Interest + Opportunity Cost.
For info, Visit our Resource Center to Download: Suggested Activities in Funding a Business.
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