What To Avoid When Applying For A Business Loan: An Insider’s Look
Small business loans are a very popular way to go for many individuals these days, especially for small business owners. I mean how else will they get the money? They could have exhausted all their other avenues. Now they have nowhere else to go. Which brings us to why we are here.
Many end up paying too much on a small business loan, especially if it’s their first loan. First-time loans can be rather tricky to navigate through, especially if you have no idea of what you are doing. I am here to help you to avoid this tragedy. I might not be able to help you out all the way. I can shine some light on the way a little bit though.
So let’s get this journey started.
1)Ask them about the APR. This is one of the most important parts of the small business loan process. If the person doesn’t mention or refuses to mention the APR element, you need to run out of there. I say run, don’t walk. This is a major red flag.
You do have the right to know the complete and total cost. if you find yourself talking to someone who is acting shady with this one, get out of there. Trust me, they won’t miss you anyway. These guys only want the naive and innocent, they don’t want the smart people.
2)There’s a simple way to avoid the prepayment penalty scandal. Ask the bank or lender to explain what happens if you pay off everything earlier then intended. Ask him or her if you’d owe anything. If the answer is “yes”, than it’s the penalty scam. You can do what you want on this one, but I’d walk away. It’s a scam. They are simply punishing you for paying it off early. Most people wouldn’t get treated this way. When you are in the loan business, there are many who get away with this trick.
Knowing it’s a trick upfront, this makes it easier to say no to.
3)Now we come to a fun one. This one is known as “double dipping.” Some like to take a new loan out, even if they still owe on the old one. This is where the double D comes into play. Lenders and banks tend to charge you double for doing this. They will double the charge on the initial loan. Only problem is that they do this on the sly. You won’t know that it’s being done until it’s already been done. By then, it’s too late to do anything about it.
HERE’S AN EXAMPLE
Say you take out a loan for $10,000. Now let’s say you take out another loan for $25,000. This should all be rolled into one, this way you are paying on the $15,000. Some will make it so you are paying double on the initial $25,000. This is what is known as “double dipping.”
Is this illegal? No, but it’s frowned upon in the industry. If you run across someone trying to do this, walk away. It’s not worth it. You will get conned with this one.
For more information on Double Dipping and Prepayment Penalties, please visit our official site down below.