6 Things to Know While Applying for A Chartered Accountants Loan

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In India, Chartered Accountancy is among the most coveted career options that only a handful of aspirants manage to qualify for each year. Given the dearth of qualified CAs in the country, their demand is always high among firms and companies. With the government designing new policies and regulations to supervise the market, the need for practicing chartered accountants has never been higher.

Chartered accountants with their own firms, realise even higher profits for the various types of services provided. Moreover, a practising CA can easily finance his/her own business through a CA loan or establish a new office space, incorporate technology into practice, start a new branch and more. These loan options can also be utilised to finance a number of personal requirements, including higher education, wedding expenses, or the purchase of a vehicle.

Major financial institutions extend this suite of secured and unsecured loans at attractive interest rates, reducing the financial burden on borrowers. Nonetheless, before applying for such credits, individuals should know more about them. Analysing the following pointers can be helpful in this regard.

Things to keep in mind while applying for a CA loan

Purpose of the loan 

Depending on the practice and needs, your requirement for finances can vary. Top financial institutions provide different loan amounts of Rs.32 lakh depending upon the nature of the loan. One can use the credit amount at their discretion.

If applicants opt for a secured credit solution such as loan against property, he/ she needs to pledge collateral to avail the credit. The loan quantum can go up to Rs.50 lakh in such cases, and there is no usage restriction on the amount availed.

Eligibility criteria

An individual can successfully apply for such a professional loan if he complies with certain requirements. These include –

  • Individuals should have a COP for a minimum of 4 years after they secure their CA certificate.
  • He/she should own a house or an office where the financial institutions operate.

Required documents

For business loan/personal loan

  • Applicants should have a certificate of practise proving work experience in an accounting firm.
  • Borrowers should have a detailed account statement.
  • KYC documents such as Aadhaar card, Voter ID, PAN card etc., have to be submitted for identification and address proof, respectively.

For a loan against property

  • Applicants need to submit their KYC documents verified by authorised signatories
  • A certificate of practice is a must to avail of a CA loan. 
  • Borrowers must submit their IT returns, balance sheet from the last 2 years
  • Also, applicants have to submit the essential documents of his/her property to be pledged as collateral

Flexible tenor and interest rate

Several leading financial institutions charge competitive interest rates on the total amount of credits extended to the borrower. Such charges depend on the loan’s nature, whether it is unsecured or obtained against collateral.

Loan tenor also has a significant influence on overall interest payment. Individuals opting for a shorter loan tenor attract a reduced interest rate, while opting for an extended tenor has a higher interest rate associated with it. Secured loans like loan against property comparatively charge lower interest rates as the credit is available against a collateral guarantee.

Maintaining a good CIBIL score

Every reputed financial institution will carefully evaluate the applicants’ credit score report before sanctioning a loan amount. In case your credit score is not up to the mark, you will find difficulty securing the loan.

A good credit score improves the possibility of receiving the loan amount and reduces the rate of interest. To increase the CIBIL score, CAs need to pay off all previous debts, avoid applying for multiple loans and pay off existing financial liabilities on time.

Extensive research about financial institutions

Applicants need to conduct thorough research regarding a loan for chartered accountant before applying for the credits to avail the best terms. Prospective borrowers can compare different financial institutions on different criteria like terms and conditions, features, interest and other charges.

In this regard, applicants must check for pre-approved offers that make availing of loans fast and easy. These offers are available on numerous financial products, including business loans, personal loans, credit cards, and more. You can check your pre-approved offer by submitting your name and contact details.

Considering the above checklist for CA loan, chartered accountants can avail of these credits for business expansion or fund a start-up accounting firm or mitigate any big-ticket personal expense. This allows one to increase his/her average income through high amounts of profits generated and also prevents the depletion of savings.

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