Private Money Lender Vs Hard Money Lender

Private Money Lending and Hard Money lending are as different as day and night. There might be some similarity between the two, but there is a number of dissimilarities between them. You should be thorough about both of these options before opting for one. Banks are usually the first choice for people when they need money. In case their loan is not approved, as people sometimes fail to match up to the required criteria for getting a loan, online lenders step in as their messiah. In case of private money lending, one uses their funds to lend money whereas hard money lenders work with brokers to generate loans for their clients. Either way, if you want to borrow money, always go for a Licensed Money Lender, private or hard money.

Similarities Between The Two

The similarities between the two boil down to the basic idea of money lending. A money lending company is a lucrative alternative if you don’t want to get a loan from traditional money lending institutions like a bank, credit union, etc. Both private as well hard money lending is ideal for specific money lending purposes. People are often comfortable borrowing from a licensed money lender as the terms and policies are more flexible. In both private as well as hard money lending, details are documented right down to their basics to avoid complications.

Dissimilarities Between The Two

Private lenders give loans out of their funds. Hard money lenders work with brokers or other sources of broker business to generate loans for people. While private money lending is risky, hard money lending is a safer option as it helps to generate more business as more referrals come to their way as they work with a lot of people. So if you don’t want to associate yourself with the conventional units of money lending institutions, you can find solace in licensed money lenders where you won’t get cheated.

Private Money Lending

Even though private money lending is riskier, they can generate more amounts of returns. In private money lending, even though one has to give out loans using their funds, people in this business believe that sanctioning loans is like buying bonds. There is an immense amount of profit in this business. Before sanctioning a loan, private money lenders have to appraise the collateral properly against which the loan is issued. They also need to keep up with the insurance policies. If something happens to the collateral, then reimbursement will be sent to them if their client has a proper insurance policy. This is the reason why inquiries are sometimes made about the collaterals offered and insurance policies of the borrower.

Hard Money Lending

Hard money lenders have to work a lot. They have to gather all the people required for them to generate loans for their clients. They have to maintain a cordial relationship with clients, brokers, investors, and accountants. These people have the power to decide whether they will sanction long-term loans or short-term loans, depending on the time taken by the client to repay his or her loan. Long-term loans provide a stable profit whereas short-term loans have a higher rate of interest attached to them. This is due to the immediate need for capital by the client. If you search the internet, you will find both types of companies as well as individuals who are willing to offer you easy loans at affordable rates.

Selecting The Right Path

Whether or not you want to go for private money lending or hard money lending depends on you. But you should keep certain things in mind before opting for a lender. Try not to rush in and wait for the right person or company whose contract and policies will satisfy you completely. You must also read all the documents carefully. It is best not to proceed further if you don’t feel comfortable with the company from which you are borrowing money.

The Other Documents

If they refuse to provide you with a complete contract, then stop immediately; report against the respective company or individual to the Registry of Money Lending. You can also report against a particular money lender if you know their license number, name, business name, etc. If you borrow money from such individuals, then you should always get a dated and signed a receipt every time you pay an installment.