In this article, we are discussing the various ways for a dentist to raise that initial financial fund to start a dental practice. In the last slide, we also examined the points to take care before taking a bank loan.
Almost all of the major banks all over the world provide loans to dentists. They have their ways to assess each loan application.
A dentist applying for a bank loan is usually a first-time loan applicant (looking to start a new practice) or a dentist with few year of professional dental practice under his belt (looking for expansion of his/her existing dental practice).
There are few points that every bank will consider before approving the loan request for a dentist. Please take a note of these points as they are very crucial. If these points are not in order, then your loan application can be rejected. So read these points very carefully.
- If you are a first-time applicant for a loan, then you will require a guarantor who can fulfill the criteria laid down by the bank. Banks will decide whether to approve your loan or not after analyzing the reputation of the guarantor.
- If you are a dentist/doctor with a few years of professional career under your belt, then the bank will assess your loan application based on your credit reputation.
What are the points the bank looks for before approving a loan?
(Please note that these points just covers the necessary options. The final approval or rejection of the loan application depends on all factors considered simultaneously. It also differs from one country to another.)
Need or Greed?
Bank makes an assessment what the real requirement of the loan is?
Need or Greed refers to the intention for which you are applying for the loan. Personal loans are made available for genuine needs like marriage, hospitalization, sound business venture or whether it is taking personal credit for education.
However, if you wish to obtain the amount and invest it in stocks or commodities to generate a higher return by speculating, then it is highly not recommended. So, as a qualified professional (dentist) your need is well justified which is to start your private dental practice.
In this clause, the bank assesses the credit history or the financial reputation of the
- Applicant applying for the loan or
- The guarantor who is supporting you for the investment.
So, if you are new dentist applying for the loan, then the financial reputation of your guarantor matters. If you are a dentist with few years into the profession, with an established dental practice, then your commercial or financial reputation matters.
Financial Reputation: It consists of many points.
- Financial history – Bank balance available.
- Nature of profession (to assess stability)
- Professional qualifications.
- Previous loans status – Pending or cleared.
- Any additional income source.
- Individual personal & professional reputation.
So, now you are almost ready to take a bank loan.
However, before that read the 3 final steps of precaution.
Have a complete read of the 3 points that can have a significant impact after you take the bank loans.
Interest rates: Carefully check the interest rates. Also, calculate the EMI that you would need to pay after taking the loan.
Interest Rates & Mortgage: Carefully check the interest rate. Also, assess the Mortgage that you need to furnish. If there is no mortgage, then the interest rate will be usually high.
Penalty Charges: In case you are not able to pay your dues on time, a hefty penalty that is charged on your loan amount. You should find out about the exact details regarding the penalty that may get levied in case of any such circumstance arising in the future. You want to ensure the affordability factor of the loan right from the beginning.
Till this point in the article, we discussed the ways to raise the initial capital to start or expand your dental practice. The topics covered till now apply to every dentist irrespective of the location or country. Therefore, start researching all the bank loan options available at your location and while finalizing a loan amount, consider the points we have discussed in this article.
In the next 2 slides, we will look at some of the specific bank loans available that are applicable only to the dentists located in India. You can inquire about the possible bank loans which are relevant to your location.