Caveat loans are for the business owners looking for the immediate funds, and they can use such loan amounts to repay their debts or expand their business. On the contrary, it is a type of loan that gets approval within 24 hours against collaterals like business units, commercial property, house, land block, or other such assets. Caveat loans are the short term loans for businesses and you need to pay extra rate of interest for such loan. This is a secured loan where you need to mortgage your property or assets to the lenders, but lenders cannot able to sell your property during loan tenure. But if you cannot able to repay their loan within the deadline then they can sell your property to rescue their loan amounts.
What are the attractive features of caveat loans?
- Fulfil only business needs: No matter how much equity you have, until and unless you are a business owner, you will not get the caveat loans on the basis of your equity or property. These are not meant for the personal needs. The financial institute will not approve of the caveat loan for your personal needs. So this is a purely business loan that are available as secured loan only.
- Value of property: When you apply for a caveat loan against the collateral, the value of the property plays a crucial role in determining the loan amount. The assessment of the property value and fund is made the lenders and then amount of the loan is based on the equity. If the lender has the interest toward your property then only you will get the short term loan and in this regard, you need to discuss your requirements with the lenders on prior basis.
- Short-term loan: Caveat loans are short-term caveat loans, which is to be repaid within stipulated time frame. In general, the period falls in between 1 to 24 months. It is mandatory for the borrower to pay back the loan amount within that particular time period.
- Interest rate: The interest rate of the loan amount varies as per the repayment terms. In general, it comes under the two types of interest rates viz. variable and fixed rate of interest. You can choose the option whichever is suitable and make the repayments based on your ability. But caveat loan can charge you more interest because this is a short term loan and you may need to repay little more compared to other business loans.
What is the use of the caveat loans?
However, usually, the caveat loans are used for the purchase of the commercial real estate property. As most of the real estate investors think it is an easy way to buy a property with the help of a caveat loan. The borrowers mainly use the caveat loans for the various purposes apart from the property purchase. It includes improvement of cash flow, renovations, expansion and development of business, paying off the business debts, and other business purchases.
Why opt for caveat loans?
Caveat loans has many advantages, as it gets fast approval, quick access to capital, improves the credit history. Though there are disadvantages that it is applicable only for short span and costlier than other types of loans. Today, you can also find some online lenders that provide caveat loans within 24 hours and you can easily apply for such loan on their official website. But before applying for such loans, you need to check their rate of interest, processing fees, pre-payment charges, part payment facility and late fine. It depends on your needs that how much amounts you want to take as caveat loan and it is better to consult with the lenders in this regard. Do not forget to check out the loan terms of the financial institute, as it may vary.