Eight most popular myths about obtaining credit
I won't apply for credit, because I won't get any" is one of the most common myths among entrepreneurs, according to data of Creditex. The lending company summarizes the most common misconceptions among its potential and current clients. According to the company, many corporate owners find it a waste of time to apply for a credit since business crediting has been frozen altogether. "The truth is that loans are being extended, but the creditworthiness of the borrowing company and of the person behind it is being carefully assessed," Creditex explained. According to the company, loan approvals during the first four months of 2010 have registered an 8% growth, compared to the same period of the previous year.
Experts specify that the delusion that the less the creditor knows about the borrowеr, the better, is common among loan applicants. They conceal their real proceeds, interim accounting reports, the purpose of the loan, previous and current credits, but practice has shown that the more the creditor knows about the loan applicant, the more convenient repayment schedule he is able to structure.
Among the frequent misconceptions is also the demand for immediately borrowing the entire amount of the loan. Creditex specifies that if a company borrows the loan on several tranches, it will be paying an interest on the actually drawn money alone rather than on the entire amount of the credit and will thus have more money for current needs.
"If the crisis hits me, I will lose everything," is another very common myth among people who have been currently paying their loan instalments. When a problem with cash proceeds occurs in your company, this is not the end of the world. Another misconception is that the client would pay whenever he is able to. "In case of difficulties with regular payments, you cannot expect the creditor to remit the penal interest," are point-blank the officials from Creditex.
Other myths of the present day are: "A business loan can be withdrawn only against pledging a business real estate." Actually, over 60% of business loans are secured by the personal immovables of entrepreneurs or their relatives. Clients should know that is not always better to negotiate a lower interest rate rather than a lower price for the property to be purchased. According to Creditex, in most cases, after the final assessment on the collateral, borrowers return to the seller of the real estate and "knock off" 5-10% of the price, thus saving much more. People also think in terms of the following wrong statement: "Don't ask me about my business since I give you my real estate". The truth is that the potential of a given company and its ability to generate profits are most important in granting the commercial mortgage loan, while the security has rather a motivating role for the regular credit servicing.
Text and image source: klassa.bg
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