Secured Commercial Loan Rates in India: Trends and Key Factors

 


Secured commercial loans are one of the financial instruments for businesses in India to get funds for different business purposes like expansion of business, purchasing of equipment, etc. These loans are termed as secured since they are backed by collateral like property, equipment or other assets, which lowers the risk for the lenders if the business fails to repay on time. The secured commercial loan rates are one of the first things that businesses consider before applying for a secured commercial loan.

What Are Secured Commercial Loans?

Secured commercial loans is granted to businesses where there is collateral present. Collateral can be properties, machines, or any other valuable assets. Secured loans are regarded as lower risk for lenders than unsecured loans without any collateral. This lower risk often leads to better loan terms and secured commercial loan rates.

Current Trends in Secured Commercial Loan Rates in India

In India, secured commercial loan rates depend on several factors like the lender, the kind of business, and the asset that is offered as security. Currently:

-          The secured business loan rates can go from around 9% to 22% per annum, which are influenced by different lenders and loan structures.

-          For particular secured loans, such as loans against commercial property, the rates may be as low as 7% to 18% per annum.

-          Secured loans with property or machinery as collateral are usually cheaper than unsecured loans.

These figures are only a guide and they might vary depending upon the market trends, the economy, and the policies of the lenders. The recent fluctuations in the lending rates of the entire market (bank lending rates included) have indicated some changes as the banks are adapting to the economic situation.

Factors That Influence Secured Commercial Loan Rates

  1. Collateral Type and Value

The rates for secured commercial loans depend on the kind and value of the collateral. Assets that are of high value may result in the situation where the lender feels less risk and consequently grants a lower interest rate.

  1. Financial Health and Credit Profile of the Business

A business that has a good financial history, stable revenue, and a good repayment record turns out to be more valuable to the lenders. Such companies can receive lower interest rates for reduced commercial loan collateral-backed loans. Low credit score can lead to higher interest rates, even though there is collateral support.

  1. Loan Amount and Repayment Term

The loan amount and repayment period can influence the interest rates. The risk of the lender is higher and the borrower is thus charged a slightly higher interest rate or a longer tenure in general.


ORIGINAL CONTENT:- Secured Commercial Loan Rates in India: Trends and Key Factors

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