Doctor Loan is the loan granted to medical professionals or students pursuing some medical course in allopathy or homoeopathy disciplines like BDS, MBBS, etc. The minimum loan amount offered is Rs. 10 lakh and it can go up to Rs. 5 crores, depending on the business requirements. This unique loan helps medical professionals kick-start their dreams of continuing their practice. And is hence granted especially to professionals in the medical field with a self-owned clinic or working at some private or government medical institutions. There are various criteria one needs to fulfil to be eligible for a doctor’s loan like proof of occupation, practice, designation, residence and citizenship. One key determinant of a doctor’s loan is the interest rate bank charges on its return.
If you are interested in understanding why and how the doctor loan interest rate determine sanctioning and eligibility for a loan, then this article is for you.
What are the interest charges?
There are several charges incorporated within the interest rates that are levied on a person once he applies for either a personal loan or a doctor’s loan. Lower the interest rate charges, higher would be your eligibility for the loan and chances of getting it sanctioned. This is because lower interest rate charges imply lower EMI requirements to meet the debts within a stipulated time and hence it would be possible for the borrower to spread out his stream of loan payments more effectively. This would help him maximise the return from both money and bonds.
The various charges included are –
Rate of interest
This usually the general doctor loan interest rate ranges from 7 to 14 percent per annum. Depending upon your loan amount, credit score, your medical degree and the like. Usually, it is advisable to go for the loan scheme that offers the least among others.
This usually amounts to 0.5 to 2% of the total loan amount you have applied for and been sanctioned also. This includes taxes as well wherever applicable. The processing fee is the one-time charge banks deduct while processing your loan request.
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Document or statement charges
This comprises charges that the bank might subject you to in case you need to fill in loan application documents physically. It means if you want physical copies of the documents while taking out your loan amount. There is another percentage of charge applicable to you when these documents get processed, amounting to around Rs. 2000 and applicable taxes.
This also has several subcategories as follows depending upon your loan type –
- If your loan type is a term loan or advance EMI or step up or step down structured monthly instalment, you will be subjected to a 4% charge on your principal loan amount plus taxes on the outstanding loan amount. This has to be paid by the borrower on the date of the full repayment of the loan with interest.
- In the case of either Flexi term loans or hybrid loans, you’ll be subjected to a 4% charge plus applicable taxes of the total amount withdrawn as per the repayment schedule on the date of the repayment schedule.
Part prepayment charges
- This depends upon the borrower type or rather the nature of the borrower. If the borrower is an individual and the loan availed be on the floating interest rate. He will be subjected to 2% charge rates and applicable taxes on part prepayment amount. Along with this, there is a mandatory rejection service charge amounting to Rs. 450 which is inclusive of applicable taxes.
- Charges will be levied on the borrower provided the new mandate form.
The above article explicitly and in-depth talks about the interest rate and associated charges when you are taking out a doctor’s loan. However, it is always advisable that you go through the bank’s schemes and related documents before investing in any venture.