Getting a bank loan today has become hard, especially if you have bad credit. Yes, you might get the loan, but the deal will not be as good. At the end of the day, you might find that you owe more in high-interest rates or have to pay a higher premium. This might cause you to pay almost double the amount of money you borrowed in the first place, especially if you took out a mortgage. Meanwhile, business loans come with loads of pressure and often have a higher price tag.
It’s no surprise that fewer people today are taking business loans out from banks. This isn’t surprising given that some studies have shown that American households owed $9.12 trillion in mortgage debt as of 2019. According to a Federal Reserve Survey, in 2017, only 40% of American business owners applied for a loan, down by almost 5% from the year before. Hard money loans from private money lenders have become an increasingly viable option if you need quick and cash.
What is a hard money loan?
So, what exactly is a private money loan or hard money loan? A hard money loan is a loan given by a private investor or a private company that is often secured by a property. Instead of looking at your credit score, private money lenders look at the value of your property or business. There is no standard interest rate for a private money loan. The interest rates depend on the hard money lender that you choose. Private loans are quick and are given for a short period of time, typically ranging between 6-24 months. This period can be extended depending on the agreement between you and the lender.
What types of properties do private money lenders accept?
Some private money lenders for real estate are selective about the type of property you can put down as collateral. Some prefer residential properties while some are more open-minded. Others might even be willing to accept a motorcycle as collateral. The best method is to be direct and ask the kind of property the lender prefers.
Are private loans the best choice?
Only take a private loan if you are sure you are going to pay it back quickly. Dragging it over time might end up costing more depending on the amount you took and the interest rates. Hard money loans are typical among property flippers who work within a short time frame. This is what makes private money lenders for real estate so popular.
If you choose to borrow from a hard money lender, put the following factors into consideration.
How to choose a great hard money lender
- Experience and credibility: Make sure that the private money lender of your choice has a good track record and years of experience.
- Payment flexibility: Although private loans are for a short time, make sure that you can get a proper payment plan.
- Interest rates: What the loan will do for you should be worth the interest. Avoid suffering a loss by carefully analyzing your finances and planning how you will use them. Also, do your research and get a money lender with manageable interest rates.
When you’re looking for the best private money lenders around, rely on the experience of GW Private Capital to transform your life.