Is a Private Money Loan Right for You?

A private money loan is becoming more common in the lending arena. When traditional methods fail, borrowers are turning to private sources for the cash that they need.

Limited Options

If you have tried every traditional method and failed, a private money loan might be your only way to go. You may have tried to obtain personal loans with a bank, but your credit score was not high enough.

A private money lender does not have complicated formulas and ratios like traditional lenders. If the project makes sense, they will examine it closely before making a loan.

Also, if your house is in foreclosure or you face another dire consequence, you might not have any options left. In which case, a private money lender could be the way to go.

Interest Rates

You will be charged much higher interest rates than traditional loan offers. In many cases you can take the market rate and multiply it by two or three times and come up with the private money rate. Since you are distressed, the private lenders know that they can get the return that they seek. In most cases, borrowers are more than willing to pay it since they are desperate for the money. If you are in a situation that merits borrowing money at 15% interest or more, private money lending might be for you.

Less Paperwork

Private lenders do not have complicated hierarchies like traditional banks do. Your loan does not have to go through four different people to be approved. You are often dealing with a single person who will loan you the money. You fill out a couple forms and you are ready to go. Sometimes, they don't even need an appraisal on your property.

Need Money Fast?

If you need the money for your project very quickly, private money loans are definitely to your advantage. Going through traditional methods, you are often looking at a month or more to obtain the money you need. If you are in a desperate situation, this simply will not work. Private money lenders have the money that you need and if they like the deal they will give it to you immediately. Since the approval process is streamlined, they can often give you your money within a week or less. This is a lifesaver for many people who need the money right away.

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