Advantages of Using a Private Lender One of the main advantages of using a private lender is the fast approval process. In most instances, you can easily apply for a standard hard cash loan right from your local bank or other financial institution. But before you even approach a local private lender, you must be aware of 5 Advantages of Using a Private Lender for Easy Application: Applying for a hard cash loan is really easy. You will not have to submit any supporting documents or paperwork. Plus, you do not have to submit the application forms to more than one company. Since all your documents are ready, it will take less than two weeks for the approval to go through.
Fast Approval: Most private money lenders offer an expedited hard money lending process. Usually, they can approve your application within a matter of days. This is a huge advantage because you do not have to wait for approval from your bank. And since you apply directly to the company, your credit score will not be affected.
No Dealings: Unlike traditional banks, private lenders do not have any dealings with the customer. This means that there is no chance for them to charge high interest rates. In most cases, they even offer no interest rates on their short-term loans.
No Collateral: Since you are dealing with private lenders, you do not need any collateral. This means that you do not have to place your home as security. Plus, there is no need to worry about your car or other valuable property being repossessed by banks. The risk of losing these valuable possessions is too high for most consumers.
Higher Interest Rates: Banks also impose high interest rates to the borrowers. They have little room to hike their rates. But private lenders do not have to share their profit and loss margins. They are free to charge higher interest rates. This is especially true for people who have defaulted on their previous loans.
Easy Payout Time: Unlike regular lending institutions, private lenders offer fast cash loans. Usually, they require payment of the entire amount in two weeks. You only pay a one-time fee for the convenience of having quick access to your funds. If you are not able to repay in time, all fees are canceled.
Convenient Payment Options: If you are not happy with the way your bank or other financial institution handles loan repayment, a private lender could be the perfect choice for you. Your options are not limited to installment and other traditional methods of repayment. You can also choose a one time fee-based repayment plan that will conveniently fit into your monthly budget. Your financial institution may offer this kind of option, but it is more common with private lenders.
Convenience of Repayment Plan: Private lenders often offer the convenience of flexible repayment plans. Most often, borrowers opt for monthly payments where they pay a slightly higher fee for the convenience of paying in advance. This option allows them to pay their debts in full each month. The main disadvantage of using a private lender to repay your debts is that interest rates are likely to be higher than those offered by banks and other financial establishments.
No Traditional Bank Repayment Methods: Many traditional banks also make their loans through private lenders. This is because these types of lending institutions do not have the same needs as traditional banks. They have smaller resources and lower credit ratings. When applying for a loan from these institutions, there is no need to worry about a high-interest rate since you are dealing with private lenders. However, if you have good credit, then you will probably have a higher interest rate when using a private lender.
No Security: Another advantage of using a private lender is that you do not have to put up collateral in case you default on a loan. Collateral can be used by financial institutions to secure their loans. This means that you may be risking your home, car, or other valuable possessions in exchange for a loan from a private lender.
Hard Money Loans Are Available: Hard money loans are made outside of a traditional financial institution. These are not traditional bank loans. They are loans made to people who have collateral – either property or money – that they pledge as security. For this reason, hard money lenders often have stricter underwriting guidelines than banks do. You will find that the interest rates for hard money loans are typically higher than those of banks, but you pay a much lower interest rate than credit cards.