Being a doctor is a true calling. But it’s also a business that comes with plenty of expenses, from student loans to professional gear and everything in between. With how expensive some of these expenses can be, it’s no surprise that many doctors need to take out loans for doctors in order to keep their businesses afloat. But if you’re not careful about how much you borrow and what you do with the money, you could end up making some serious financial mistakes. After all, loans for doctors are still loans, and they come with all the same risks as any other type of loan.
Understanding the risks and being able to manage them is key to maintaining a healthy business and personal finances. Of course, every doctor’s situation is unique, so it’s ultimately up to you to determine how much of a risk you’re willing to take on.
To help you better understand the risks and make the right decisions for you and your business, we’ve compiled a list of some common personal financial mistakes doctors make when taking out loans.
1) Don’t Take on More Than You Can Handle
It’s easy to get in over your head when you feel like you have to say yes to every opportunity that comes your way. But saying no is sometimes the best decision for both your personal and professional life. When it comes to taking out loans, only borrow what you know you can comfortably afford — don’t let yourself become overwhelmed by debt.
As a professional, you must understand that LOANS, regardless of how good they are, are still a liability. So, by all means, take advantage of the opportunity, but do so wisely and with tempered expectations. By better understanding how to manage your money and limit your borrowing, you can stay on a solid financial footing and prevent yourself from becoming buried in debt.
If you’re considering taking out a loan, be sure to do your research ahead of time and understand all the terms and conditions involved. Speak with a financial advisor if necessary to get help making the best decision for your situation.
2) Don’t Use Your Home as a Collateral
One of the most expensive loans you can take out is a home equity loan or line of credit. These forms of borrowing are secured by your home and carry a lower interest rate than other types of loans because they’re less risky—the lender has collateral in case you default on the loan.
However, because they’re secured by your home, they also put your house up as collateral. Should you fail to repay the loan, it could result in foreclosure and even bankruptcy. Fortunately for you, there are loans for doctors that don’t require your home as collateral. However, you need to be aware of some predatory lenders in the market always lurking around for doctors to put in a financial bind. If you don’t know what to look out for, it can be easy to make the wrong decision and risk losing your home.
To avoid this situation, make sure that you know everything about your lender, the conditions of the loan, and what other options are available to you. If you need help with this, we would be glad to assist you with the best-personalized loans for doctors designed specifically to meet the needs of physicians like you.
3) Lack of understanding of the Terms of One’s Loan
This is one of the most important things to be aware of when taking out a loan, yet so many people enter into agreements without fully understanding the terms. It’s essential that you understand all aspects of your loan agreement before signing on the dotted line; otherwise, you could end up in serious financial trouble further down the road.
For example, know exactly how much you’ll need to repay each month and what would happen if you missed a payment – some lenders will charge very high penalties for late or missed payments. Moreover, not knowing the difference between a fixed rate and an adjustable rate could end up costing you tens of thousands of dollars, if not more. Thus, if you’re unsure about anything relating to your loan, don’t be afraid to ask questions. A little bit of knowledge now can save you a lot later.
For professional yet personalized assistance, contact us. Our team of experts will be more than happy to help you secure the best loans for doctors possible.
4) Don’t Borrow Money Without Doing a Quick Cash Flow Calculation
It’s always a good idea to have a general sense of how much money you need to borrow before you start looking for loans for doctors. You don’t have to know the exact amount, and it is okay if your estimate ends up being off by a few thousand dollars. The important thing is that you have some kind of ballpark figure in mind. This can help you narrow down your search, bring more clarity to your discussions with lenders, and make it easier for you to find the right loans for doctors.
Let’s say, for example, that you need a loan of $200,000—which is quite common among physicians who are new to their practice. If you don’t have a sense of how much money you need to borrow, it’s going to be difficult for you to find the best doctor loans out there. However, if you do know that your current cash flow deficit is about $200K (or whatever figure makes sense in your situation), then you can more accurately and efficiently search out those lenders who will be able to help.
5) Treat Any Offers of Financial Advice as Just That Advice. Only Do What Feels Right for You and Your Practice
As a doctor, you and only you are responsible for the financial well-being of your medical practice. Even if you have a great accountant, lawyer, or wealth advisor, they can only give you their professional opinion – it’s up to you whether or not to take that advice. The same goes for anyone offering “deals” on anything related to financing your physician loan – make sure it feels right before signing anything!
So, when taking out any loan, listen to your instincts and inner voice, do your research on the person or company offering it, and make sure you understand all aspects of the loan agreement before signing on the dotted line.
As a physician, it’s important to feel comfortable with your loan and the lender. Don’t be pressured into signing anything that you don’t understand or that doesn’t feel right. Do your research on the person or company offering any type of financing, and make sure it makes sense for your current financial situation.