Cash Credit v/s Foreign Currency loan Calculator

Myforexeye's Cash Credit (INR) vs Foreign Currency Loan (FCL) Interest Rate Calculator is a handy/needy instrument to compare interest costs. Usually, companies'drawdown their Cash Credit limits from their banks to finance short term funding requirements. A Foreign Currency Lending is another funding alternative available. Whenever there is a requirement to avail Cash Credit facilities, a company should always compare their Cash Credit interest cost vis-a-vis a Foreign Currency Loan interest cost using interest savings calculator. This will enable companies to evaluate cheaper funding options thereby saving substantially on interest costs.

Cash Credit is free from exchange rate risk while a Foreign Currency Loan have an inherent currency exchange risk. For a fair apple-to-apple comparison, Foreign Currency Loan should be hedged for exchange risk and such hedging costs should be included in the overall interest rate cost comparisons.

FAQs

What is Cash Credit?

Cash Credit is free from exchange rate risk while a Foreign Currency Loan have an inherent currency exchange risk. For a fair apple-to-apple comparison, Foreign Currency Loan should be hedged for exchange risk and such hedging costs should be included in the overall interest rate cost comparisons.

What is a Foreign Currency Loan (FCL)?

As the name suggests, it is a loan availed in foreign currency. Usually, such loans are taken in US dollars, Euro, British Pound, Japanese Yen. Since the loan is taken in foreign currency, it is repaid in foreign currency. As such companies availing loan in foreign currency will face forex risk and will need to manage forex hedging cost.

Who are eligible for a Foreign Currency Loan?

Any exporter or importer can avail a foreign currency loan from their existing bank.

How to calculate foreign currency loan cost?

Myforexeye's interest rate savings calculator calculates Cash Credit (INR) vs Foreign Currency Loan (FCL) interest by entering the following details:

  1. Period of Foreign Currency Loan (FCL)
  2. Cash Credit (CC) Rate (%)
  3. Amount
  4. Spread (%)
All the other cost parameters will be computed automatically.

After all the relevant details are fed into Myforexeye's Cash Credit v/s Foreign Currency Loan Interest Calculator, the output shows the following:

  1. Total Foreign Loan Interest cost
  2. Whether to avail Cash Credit or Foreign Currency Loan

Such an Interest Rate Loan Calculator helps you to make better financial decisions, with a potential to save significantly on interest costs.

Things to consider while taking a foreign currency loan.

There are 3 primary cost items for a foreign currency loan. They are as follows:

  1. LIBOR of the particular foreign currency
  2. SPREAD (commission/remuneration) charged by the bank
  3. HEDGING COST of the foreign currency to Indian Rupee exchange rate

Hedge cost of a foreign currency loan is not only the most critical cost item but also the largest item among the three. Companies are usually unaware about efficient management of hedging cost, and its understanding and calculations.

Why you should use Cash Credit and Foreign Currency Loan Interest Rate Calculator by Myforexeye?

Myforexeye offers premium Forex Risk Management services along with the foreign loan interest calculator to help you calculate the cost of short term loans available and then make decisions on which to go for. Such service provides detailed understanding of the loan cost and also help you to manage it effectively, so as to keep the overall cost to a minimum and offer substantial interest cost savings.

Cash Credit (INR) Vs Foreign Currency Loan (FCL)

Foreign Currency Loan (FCL) Date

Currency

Period of FCL

Amount

Cash Credit (CC) Cost (%)

Spread (%)

FC Spot Rate

Foreign Currency Interest Rate (LIBOR) (%)

Hedging Cost (%)

FC Forward Rate

Total FCL Cost

Foreign Currency Interest Rate (LIBOR)

Spread

Hedging Cost

Total Interest Cost

Foreign Currency Loan :

Cash Credit :