Consider Your Options Before Accepting That Loan Offer
Do you plan to apply for a business loan to increase your capital as an entrepreneur? If so, do you intend to conduct your due diligence before signing the offer letter's acceptance column?....., You should, of course.
I am aware of how joyful the news of your loan approval is. However, before signing your name in the acceptance column, it is my sincere recommendation that you familiarize yourself with the loan's terms and conditions as laid forth in the offer letter. It is now clear from my research and work experience on this topic that failure to perform due diligence and a lack of understanding of the loan's terms and their implications are the main reasons why borrowers sometimes default on loans, even after restructuring or rebooking the loan facility. Loan agreements become enforceable once they are signed by the parties, just like any other contract. This implies that the loan's terms and conditions become legally binding, giving the entitled and/or obliged parties, respectively, rights and obligations.
When evaluating a loan, keep in mind the following important details:
the interest rate at which your desired lender is willing to lend;
the lending fees and appropriate interest rate;
if the loan or any interest due and payable therefrom is not repaid after the term, the appropriate penal rate;
charges that are recurring and those that are payable on an ad hoc basis; and
Make sure the company endeavor you plan to invest the loan into will be profitable and will have enough time to pay back the loan.
Additionally, keep in mind that lending costs and interest rates are frequently changeable. So make an effort to engage in bargaining. However, it must be acknowledged that lending institutions control loan agreements and might not wish to budge on the appropriate interest rate and lending costs. Additionally, indeed, lending institutions are always looking for profitable company initiatives to invest in. Therefore, as a borrower, it is your responsibility to persuade your lender that you are a creditworthy businessperson with an enterprise that has the potential to generate income shortly. The chance of lower lending fees and charges is great if you can prove this.
To guarantee that the correct interest rate is applied to the loan after the loan facility has been disbursed, maintain track of any withdrawals made on the loan account for repayment of the principal amount and interest due and payable. If you ever notice that the loan is being charged a different interest rate or fee. Please file a complaint right away with the lending institution to validate the situation. The Central Bank of Nigeria (CBN), which regulates banks and other related financial organizations, is open to receiving complaints in cases where the lending institution continues to engage in this unfair behavior.
Unsuspecting borrowers' failure to repay loans has been attributed mostly to lending institutions' imposition of exorbitant interest rates and arbitrary charges. This unethical technique means that the borrower's debts are falsely increased without his or her approval. The heartbreaking part of this tactic is that a borrower who is not well instructed will be excessively forced to perform the contract by the lending institution.
On that note, make an effort to do your due research the next time you plan to evaluate that loan. If you believe the legalese and numbers in the offer letter are way beyond your comprehension, kindly hire an attorney to explain the legal ramifications of the loan's terms and conditions and an accountant or auditor to explain the numbers and their associated financial ramifications. I honestly believe that it will be in your best advantage to hire the required expert services for a little price as opposed to paying through the nose for your debt and/or losing the collateral used to securitize the loan.
Do you also take into account the psychological and mental stress connected to being labeled as a debtor?