Not every person is blessed enough to go through life without undergoing the hardship that comes along with a cash crunch. At times of financial need, we may have to look elsewhere for funds. Though the most preferred institution most people contact in this regard are the banks, the option of availing short-term funds from a private money lender has today become popular with many people opting for this mode of finance.
Who Are Private Money Lenders? What’s Their Deal?
Private Money Lenders are a definite Godsend for those who require immediate financial assistance, but cannot avail the same from the traditional sources of finance, like banks, etc. Why? The reasons are aplenty, however the main causes, as enumerated by a recent article in www.forbes.com are: lack of collateral, low credit ratings, previous loans and issues related to payments, loan repayment history, etc. Any one of these can cause the loan application to be denied or postponed. Now, imagine the funds were required for closing a deal, like a real estate venture, where the repayment is guaranteed on receipt of the profits? This is a dismal situation and is a perfect example of lost opportunity.
Its at times like this that the true usefulness of the private money lender comes to the fore. A private money lender is often referred to as a Hard Money Lender. Please be aware that this mode of financial assistance is a typical example of one being offered by a non-institutional individual or company, i.e., not a bank. The main advantage that people who avail such credit vouch for is the relative ease with which the process is done. There is virtually no red tape, no waiting in long queues, and no unnecessary and often tedious verification processes. A person’s credit score is never taken into consideration by the Hard Money Lender.
Often, it’s the choice of private lenders that boggles one’s mind. Today, many lenders can be found. So, how then can the best suited one be chosen, from the many that now exist?
Given below are a few hints that ought to help you make an informed choice. Be wary, for not all lenders are as helpful as they seem.
Tip 1: Ask- Are they legit?
This is the foremost step that needs a considerable amount of thought before proceeding with the deal. It is vital to see to it that the lender is legitimate. You need to deal with reliable money lenders, who will not trick you out of your money.
Tip 2: Understand the need for Background Checks
Background checks will help assess the worthiness of the private money lender. Expect to find relevant information like experience, credibility, etc. by way of getting a background check done.
Tip 3: Take an interest in the Interest Rates
Interest rates of the loan matter a lot while choosing the money lender. Try to look for lenders who offer loans at interest rates that are favorable to you.
Tip 4: Ease in application and approval
Look for a private money lender who doesn’t delay the approval process without due cause. This is important especially for loans that are being taken to finance time-based projects.
Tip 5: Easy payment options
As a borrower, it is your responsibility to repay the loan amount, as well as deposit the accrued interest. Thus, it becomes vital to find a lender that offers easy payment schemes.