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What are advantages and disadvantages of loan?? |
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Answer» Join betternation.xyz This is a site where u can have a lot of friends and fun ? ? ? Advantages of term loans\tThe loan is not repayable on demand and so available for the term of the loan - generally three to ten years - unless you breach the loan conditions.\tLoans can be tied to the lifetime of the equipment or other assets you\'re borrowing the money to pay for.\tAt the beginning of the term of the loan you may be able to negotiate a\xa0repayment holiday, meaning that you only pay interest for a certain amount of time while repayments on the capital are frozen.\tWhile you must pay interest on your loan, you do not have to give the lender a percentage of your profits or a share in your company.\tInterest rates may be fixed for the term so you will know the level of repayments throughout the life of the loan.\tThere may be an arrangement fee that is paid at the start of the loan but not throughout its life. If it is an on-demand loan, an annual renewal fee may be payable.Disadvantages of loans\tLarger loans will have certain terms and conditions or covenants that you must adhere to, such as the provision of quarterly management information.\tLoans are not very flexible - you could be paying interest on funds you\'re not using.\tYou could have trouble making monthly repayments if your customers don\'t pay you promptly, causing\xa0cashflow problems.\tIn some cases, loans are\xa0secured\xa0against the assets of the business or your personal possessions, eg your home. The interest rates for secured loans may be lower than for unsecured ones, but your assets or home could be at risk if you cannot make the repayments.\tThere may be a charge if you want to repay the loan before the end of the loan term, particularly if the interest rate on the loan is fixed. |
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