A doctor loan is an umbrella term for personal loans, business loans, loans against property, and home loans, specifically for medical professionals.
These loans are one of the most efficient ways to serve the short- and long-term capital requirements of a healthcare centre.
Exigencies can crop up anytime for any business, but it especially holds for healthcare facilities.
And, draining the available capital of a clinic or hospital over such unprecedented expenses can impact its financial footing and expose it to future contingencies that might be more pressing and require a considerable cost.
A brief look at Indian healthcare financing –
- Rs.1657 – Per capita expenditure by the central and state governments in the healthcare industry (Rs.70,000 – Per capita spend of the US government in their healthcare infrastructure).
- 1.6% of GDP – Government expenditure in the healthcare industry.
- 6% of GDP – Global standard for government expenditure in the healthcare industry.
Although the government is moving towards a higher spend in the years to come, aiming at 2.5% of GDP by 2025, it is still far-fetched. In the meantime, most medical professionals either resort to self-financing or avail a doctor loan.
However, prior to availing such credit facility, it is essential to use a doctor loan calculator to be aware in advance of the obligations that follow it.
What is a loan calculator?
A loan calculator is an online tool made available by financial institutions, using which individuals can calculate their doctor loan obligations, i.e. interest amount and EMI before availing a loan.
It is a highly beneficial tool at the disposal of prospective borrowers since it allows them to compute and learn beforehand about their monthly liabilities and prepare their finances accordingly.
It functions on three variables –
- Loan quantum,
- Repayment tenor, and
- Doctor loan interest rates.
Moreover, such a calculator employs industry-standard formula to calculate EMIs and interest payable. This formula is shown below –
E = P x R x (1 + R) ^ N / [(1+R) ^ N – 1]
In this formula, each variable represents the following –
E – Equated Monthly Instalments.
P – Principal or loan amount.
R – Rate of interest.
N – Repayment tenor in months
How to use a doctor loan calculator?
To use the calculator, individuals must adhere to the following steps –
- Search “doctor loan calculator” and visit the website of your preferred lender.
- Enter the loan amount and repayment tenor.
Post these steps, individuals can view the EMI amount, total payment, and total interest payable against those variables. Individuals can also change the variables to their taste to reach an agreeable EMI amount or total accrued interest.
After due calculation and upon deciding the loan amount and tenor, individuals can choose to apply for a loan for doctors.
- The Indian hospital industry is estimated to reach a market valuation of Rs.8.6 trillion by 2022.
What are the factors that affect EMI?
Before using a doctor loan calculator, individuals should be aware of the factors that affect EMI calculation. These are –
- Loan amount
The EMI amount is directly proportional to the loan amount. Therefore, a high loan amount implies a higher EMI and vice versa.
Individuals should duly assess their financial requirements to meet a specific expense, for instance, costs of switching to telemedicine before using a calculator to avoid uncertainty later.
- Repayment tenor
Repayment tenor is the period within which a borrower needs to repay the loan amount along with interest. In cases of an unsecured doctor loan, this tenor ranges up to 60 months.
The repayment tenor and EMI share an inversely proportional relationship. Therefore, a longer tenor implies a low EMI amount and vice versa. However, individuals should note that longer tenor results in a higher interest accrual.
Therefore, before choosing to finance any venture, such as tapping into the emergence of nanotechnology in India, individuals should gauge their financial footing and affordability.
- Interest rate
Another crucial factor that plays a significant role in EMI calculation is doctor loan interest rates. However, this factor depends on the financial institution from which you are borrowing.
What are the benefits of a loan calculator?
A few of its benefits are mentioned below –
- It allows the user to know about their EMIs and interest payable (monthly and cumulative) in advance and that aids in a more informed decision concerning borrowing.
- Individuals can compute EMIs across different varieties of repayment tenor and loan amount in a calculator to find the mixture that suits them best.
- A loan calculator also facilitates comparison across lenders.
A doctor loan can be used for multiple purposes related to medical practice and comes forth as a superlatively convenient agency to mitigate financial obligations.
Moreover, in times of competition in the Indian healthcare industry, it is all the more essential to secure a firm financial footing whilst improving the aspects of an individual’s medical practice.
The competition and doctor loans form the answers to the why and how of healthcare finance.
- In 2018, the number of registered allopathic doctors in India were estimated at 11.57 lakh.
Nonetheless, it is essential to utilise a calculator before availing a loan to make the repayment process more convenient. These tools are available on the official website of several financial institutions.