Banks have a sweet way of conquering the heart of entrepreneurs with readily available and affordable solutions to their financial mess using diversified bank loans. Good thing about loans is that you have to repay it in bits until it matures. The cost of servicing bank loans can eat a big chunk of an entrepreneur’s hard-earned profits. At all costs, an entrepreneur should minimize expenditure and maximize on profits. For that reason, an entrepreneur should avoid these types of bank loans.
1.Secured loan
Secured bank loans demand that an entrepreneur pledges an asset or a collateral to the bank, to eliminate the risk of default payment. A piece of land, a house, a car or a business asset are preferred by the banks as collaterals. Obtaining a secured loan can be costly considering the bank perceives you as a risky borrower. Signature loan or unsecured loans can be a better option. Unsecured bank loans are classified according to the borrower’s credit score or history and the ability to clear the loan from personal income.
2.Personal loan
Borrowers are sometimes granted loans for personal medical care, education, vacation or purchase household appliances like a refrigerator as opposed to business or commercial use. Such loans are either unsecured, or secured by the asset purchased or by a guarantor. This is bad for business. It is prudent as an entrepreneur to work hard as an and save more so that you can finance your personal projects from your pocket without relying on a bank loans.
3.Soft mobile loan
Technology has simplified the hard work of queing at the bank and too much paper work to secure a loan. Soft mobile loans come in handy and easily at the convenience of an entreoreneur. The procedure is less demanding and all you need to do is follow up the guideline provided. But these soft mobile loans offerd by bank loans don’t come cheap. The intrest rates are very high, and most borrowers are blind to that. As a business person, the cost of borrowing money should not eat into your revenues. Real bank loans are much more affordable and less addictive compared to soft mobile loans.
4.Mortgage loan
With an impressive credit score, many mortgage options tailored to meet all clients’ needs, and your dream house right on your finger tips, why should you resist a mortgage loan? Mortgage loans are kinds of loans for consumers to raise funds and purchase a home or a real estate. This seems like a perfect short cut compared to saving, but there are other better options of getting yourself a house. You don’t want to be servicing a mortgage when you that money could be ploughed back to business.
5.Car loan
Now that you are earning a six-figure salary, getting a new car must be the next big thing in your mind. Getting a loan to purchase a car and paying back in installments sounds perfect. But cars, unlike most assets, depreciate over time and their value reduces. Servicing a car is expensive. That money could be put to better use if yuou invest in a business.
