7 Fees You Might Have to Pay When Refinancing Business Loans
Many companies that apply for their first business loans have to repay them for years to come. While this might not be a problem to many firms, interest rates, and monthly fees can make running a business a burden. Will refinancing such a loan solve these problems? What kind of charges should you expect?
Today, we will take a look at business loans and the seven types of fees that you might have to pay when refinancing them. It is important to understand that not all lenders or financial services have these charges, but we will still present them so you can get an idea of what to expect.
Refinancing Business Loans
Refinancing business loans shouldn’t be done just for the sake of doing it. Refinancing smartly can have a lot of advantages especially when it has to do with a company. Here are a couple of reasons why refinancing business loans is a good financial strategy for some companies:
Refinancing makes sense if you are planning to renovate your business. Do you want to buy new equipment or upgrade the looks of your working place? Refinancing your business loan can make sense in this situation. This way, you will no longer have to request a new business loan. Your company’s performance changes over the years. Maybe you make more or less of a profit. If it’s the latter, the chances are that you are better off refinancing than asking for another financial service. It is common for a businessperson to change some terms if the current loan no longer suits his/her business or economic views. Refinancing business loans makes more sense when you want to access the equity in your business.
Reducing Loan Repayments – A Good Reason to Apply for Refinancing
Last but not least, you can consolidate your debts. This service will transform all your debts into a single one. It will help you focus on a single debt with one interest rate. Every month, you will pay less (debt and interest rate) than before and save more money in the long run. So, as you can see, there are many reasons why you should check refinancing business loans. The chances are that after applying for a business loan, at some point in time, you will want to make a change to a loan, to refinance it one way or another. However, you will also need to be ready to pay some fees.
Seven Fees You Have to Consider
There are many fees that you must be aware of before applying for a refinance. Yes, these charges can also be found when applying for a new loan or a new financial service. However, they vary depending on how much money they take. Let’s take a look at those seven fees you may have to deal with when refinancing:
- Application or Establishment Fee: This is the type of fee you will see for every type of financial service that you apply. It is also present on a new loan or refinances so make the best out of your financial decisions.
- Settlement Fee: If your request for refinancing business loans gets approved, you may have to pay a settlement fee to complete the financial process.
- Valuation Fee: The chances are that your company will buy a new commercial property or equipment. When you buy those with a business loan, the loan will be re-calculated. In other words, it will have a new value. Lenders will charge you for this process.
- Stamp Duty: If your company buys a new property or land, you will have to pay the stamp duty. The rate will increase based on the price of the property or the land you acquired.
- Government Mortgage Registration Fee: If stamp duty wasn’t enough, when you buy a new property you will also have to pay this registration fee.
- Exit or Discharge Fee: You may have to pay a discharge fee to the lender. The cost mainly depends on the lender and the type of loan you are refinancing plus other factors.
- Early Repayment Fee: Some may see this as a penalty, in any case, if you make an early repayment, you may have to pay this fee.
As you can see, if bureaucracy wasn’t enough for you, now you will have to pay for it as well. We suggest contacting an expert in finances, get a calculator and start doing the math. You will want to know exactly what you are getting into before placing your request for refinancing business loans.
So, these are the seven deadly “sins” of refinancing a business loan. If you want to learn more about business loans or any other financial service, contact Business Loans Australia today. They will offer you expert advice.