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Your Medical Equipment Loan Passed DSCR — But Did Anyone Check the AMC?
A bank's DSCR test on a CT or MRI loan is measured against one number: the EMI. It says nothing about the annual maintenance contract that keeps the machine running, and on a large imaging system, that contract can equal 6 to 10% of the entire capital cost, every year, for as long as you own the equipment. A project can sail through the bank's sign-off and still be quietly cash-negative once that bill is added in — and almost nobody runs the second calculation before signing.
📍 CreditCares — Godrej Waterside, Sector V, Bidhannagar — helping diagnostic centres and hospitals model the real numbers behind a medical equipment loan before the OEM quotation is signed.
Quick Summary
- DSCR measured on EMI alone isn't wrong — it's incomplete. It answers "can this loan be repaid," not "does this equipment actually make money."
- AMC is the single biggest missing line item. On a large imaging system it can run 6-10% of capital cost every year, comparable in scale to a real chunk of the EMI itself.
- A project can pass the bank's test and still be marginal. This worked example shows a DSCR of 1.58x on EMI alone dropping to 1.14x once AMC is included — below most banks' own comfort threshold.
- Consumables and technologist salaries belong in the same true-DSCR calculation, not just AMC — the point is modelling full operating cost, not just the loan.
- Get the AMC quote in writing before you buy, not after — it's the single most useful number for running this calculation honestly.
- This applies with more force to refurbished equipment, where funding is lower and AMC availability itself needs checking before commitment.
01 · The gap
The DSCR Trap in Equipment Finance
Every equipment loan gets underwritten against a DSCR test, and for good reason — it's the single number a bank trusts most to answer "will this loan get repaid." The trouble is what the test leaves out. A bank models your projected revenue against your annual loan obligation. It does not, by default, model your AMC, your consumables, or your technologist and radiologist salaries against that same revenue. Those costs are real whether or not the bank counts them, and on imaging equipment specifically, the AMC alone can be large enough to change the entire picture.
02 · The mechanics
What DSCR Actually Measures
The formula itself is simple. What varies, and what most borrowers never question, is what actually goes into "net cash available." A bank's version usually starts and ends with projected revenue minus direct running costs it has visibility into. It rarely goes hunting for a maintenance contract that hasn't been signed yet.
03 · The AMC problem
The Missing Line Item: AMC
On a high-end imaging system, industry practice puts the Annual Maintenance Contract at roughly 6 to 10% of the equipment's capital cost, every year, covering parts, scheduled service visits, and uptime guarantees. On a ₹4 crore MRI, that's a real range of ₹24 lakh to ₹40 lakh annually — a fixed, recurring obligation that exists independently of how well the loan itself was structured. It sits alongside the EMI on the business's cash flow statement whether or not it sat inside the bank's DSCR spreadsheet.
04 · The worked example
Worked Example: A ₹4 Crore MRI, Two DSCR Pictures
A 1.5T MRI costing ₹4 crore, financed at 80% (₹3.2 crore loan) over 6 years at 10.5% — a typical rate band for a company or LLP borrower at a public sector bank — carries an annual EMI of approximately ₹72,00,000. Here's how the DSCR looks two different ways.
| Line Item | Amount |
|---|---|
| Projected annual revenue | ₹1,80,00,000 |
| Less: staff, power, consumables, insurance | − ₹66,00,000 |
| Net cash before AMC and EMI | ₹1,14,00,000 |
| Annual EMI | ₹72,00,000 |
EMI-Only DSCR
1.58x
₹1,14,00,000 ÷ ₹72,00,000 — comfortably above most bank thresholds
True DSCR, With AMC
1.14x
After an ₹32,00,000 AMC (8% of capital cost) — below most banks' own comfort threshold
The bank's own appraisal never saw a wrong number. It simply never asked the AMC question — and the ₹32 lakh gap between those two DSCR figures is the entire difference between a project that looks safely fundable and one that's actually running close to the edge.
05 · Building the full picture
What Belongs in a True Operating DSCR
- AMC or CMC costs, obtained in writing from the OEM at the same time as the equipment quotation.
- Consumables, such as contrast media, films, and disposables specific to the modality.
- Technologist and reporting radiologist costs, whether salaried or per-scan.
- Power and utility load specific to the equipment, which can be substantial for imaging systems with dedicated cooling requirements.
- Insurance on the asset itself, often a lender condition in any case.
None of this replaces the bank's DSCR test — it supplements it. The bank's number tells you the loan is structurally serviceable. Your own true-DSCR number tells you whether the equipment is actually a good decision.
06 · The refurbished case
Why Refurbished Equipment Changes the Math Again
Refurbished imported imaging equipment typically funds at 60-70% over a shorter three-to-five-year tenure, with a residual life certificate required from the OEM or an authorised service provider. The AMC question matters even more here — a lower purchase price is only a genuine saving if reliable, locally available service support exists at a known annual cost. A cheap machine with no accessible AMC isn't cheap once you price in unplanned downtime and ad hoc repair costs, which are far harder to model into any DSCR calculation than a fixed annual contract.
Ask the OEM for the AMC quote in writing at the exact same time you request the equipment quotation, not after the purchase order is signed. Vendors are far more willing to negotiate AMC pricing before the sale closes than after, and having both numbers together lets you run the true-DSCR calculation as part of the buying decision itself, rather than as an unpleasant surprise the first time the annual service invoice arrives.
Want your true DSCR checked before you commit to an equipment purchase?
Get a Free DSCR Review08 · Self-check
DSCR Calculator: EMI-Only vs True
Run your own numbers to see the gap between the bank's DSCR and your real operating DSCR.
09 · Myth vs fact
Myth vs Fact
10 · FAQ
Frequently Asked Questions
What is DSCR in a medical equipment loan?
Debt Service Coverage Ratio — net cash available divided by annual loan repayment. Banks typically want 1.25x to 1.5x, calculated against the EMI alone.
Why doesn't DSCR automatically include the AMC?
Because standard credit appraisal models revenue against the loan's own obligation, not every operating cost — AMC has to be explicitly added in to get a true picture.
How much can AMC actually cost on equipment like a CT or MRI?
Typically 6-10% of capital cost annually — on a ₹4 crore MRI, roughly ₹24-40 lakh a year.
Can a loan pass DSCR and still be a bad decision?
Yes — this article's worked example shows exactly that: 1.58x on EMI alone, 1.14x once AMC is included, which is below most banks' own comfort threshold.
Should I get the AMC quote before or after applying for the loan?
Before — ideally alongside the equipment quotation itself, so the true-DSCR math is part of the buying decision, not a surprise afterward.
11 · Conclusion
Conclusion
A bank's DSCR sign-off tells you the loan is structurally repayable. It doesn't tell you the equipment is a good decision — that requires adding back everything the bank's spreadsheet left out, starting with a maintenance contract that's often large enough to move the number from comfortable to marginal on its own. Get the AMC quote before the purchase order, not after, and run both numbers before you sign anything.
Financing a CT, MRI, or Cath Lab?
CreditCares structures medical equipment finance at 9.50-14.50% p.a. across 80+ bank and NBFC partners, and checks your true DSCR before you commit.
This article is for general information and does not constitute financial advice. AMC percentages and DSCR thresholds are indicative industry benchmarks, not guaranteed for any specific equipment, lender, or facility. The worked example is illustrative. CreditCares is a loan consultancy and Direct Selling Agent (DSA), not a bank or NBFC — final sanction, pricing, and terms rest with the lending institution. Consult a chartered accountant or credit advisor for guidance specific to your project.