When it comes to church loan rates, they can vary from one lender to another. Many factors impact the interest rate, and interest rates are charged for different purposes and for different amounts of time. These are explained below.
Size of Church
There are many types of loans available to a church. Small church loans can be availed to build or improve church buildings. Churches can also go for secured church loan which is available for church security. For a church to avail of such loans, the pastor and church must undergo a thorough analysis. The size of the church and its need are key deciding factors.
Purpose of Loan
Different church loan rates can be chosen depending on the purpose of a loan. There are many types of church loans available that can be used for fundraising purposes, like building a new church, buying new furniture or equipment, or undertaking a significant renovation of church buildings. It can also be used to cover all the expenses involved in a missionary trip.
Location of Church
Some lenders may offer church loan rates that are different from those provided by other lenders. For instance, if a church is located in a remote area, then the interest rate may be high. This is because the borrower has to pay high interest by travel a great distance to obtain money. On the other hand, church loan rates offered near the location of the church have lower rates. Factors like location and immediate cash flow to help determine the exact rate of interest to be offered.
Credit History of Church
Sometimes lenders request the church’s credit history to be evaluated to decide church loan rates. The evaluation includes checking on church records for previous lending problems. The church management should be able to convince the lender that their previous lending practices have been rectified. Other factors such as cash flow and income of church members are also taken into consideration. Lenders prefer members who earn a regular amount of income since they have less to lose in terms of future repayments.
Availability of Collateral
Having a church building as security may help you get attractive loan rates. Factors that also affect loan rates are the type of collateral and the church property evaluation process. Your church may attract more customers by offering loans at competitive interest rates. If you are planning to offer tangible items as collateral, such as church furniture, wardrobes, bells, chimes, the appraiser will look at how much is the market value of each item.