General Money Lending – A Short Guide to Private Loans

July 2, 2018

Private money lenders can be described as non-institutional loan lenders that provide short or long-term loans for a wide range of purposes such as property investments, business startups, auto loans, and personal purposes. With a private lender, you can get a loan in as little as few days to weeks. If you are looking for an affordable private lender, you can rely on Asteria Lending for a reasonable interest-rate loan.

There are basically three types of private lenders, and the terms and conditions of lending will depend on the relationship between the lender and the borrower. The three types of private lenders are;

• The primary cycle which includes friends, and family,
• The secondary cycle which comprises colleagues, and professional acquaintances, and
• The Third-party cycle which includes the hard money lenders and accredited investors.

Private money lending services are ideal for fix and flippers, who are looking to purchase or renovate properties. The lending service is also available for those who need funding quickly, especially for short-term and long-term business investors. Lending is also suitable for the buy and holds investors who are looking to renovate properties and then refinance such properties through a mortgage or any other conventional means.

The long-term investors need private lenders for loans to refinance long-term businesses or some other long-term investments. The interest rates for most lenders may vary between 5-15 points, while the typical terms for loans may vary from 1-3 years with the short-term loans lasting not later than 1 year. The time for approval for most loans may vary from between 5 minutes and few days, unlike banks where it may take several weeks or months before the approval of a loan depending on how you meet the criteria. The time for funding by a private lender may vary from between 7 and 15 days.

Unlike banks, private lenders may require a credit score as low as 550 for the approval of a loan, and you can check your credit score from the lender before you apply for the loan.

The private lender Fees, Rates, and Costs

The interest payable on loans from private lenders is assessed as an interest-only payment and that means the borrower pays monthly interests throughout the terms of the loan. Some lenders do impose penalties when you don’t pay the loan when due and there are lenders who will not allow you to repay early so that you can reduce the holding costs.  The private lenders, especially the hard money lenders normally offer loans that attract the following typical costs, interest rates, fees, and costs;

• Interest rates of between 5-13%,
• The lender fees (in form of points) – between 1.2 and 10%,
• The closing costs- this could vary between 2-5%, and
• Independent appraisal- This could cost between $100 and $400.

Choosing the right private lender

There are certain factors you must consider before choosing the ideal private lender, regardless of your situation;

1. The reputation and responsiveness

You need to ensure that your preferred private loan lender is quick to respond to inquiries, and they must be capable of providing answers to your questions. You may want to visit the lender’s website or even interview some of the clients who have used such lenders before. You need to consider a private loan lender with extensive experience in handling diverse situations.

2. They must provide loan flexibility

Make sure the terms of a lender are disclosed, even before you agree to take a loan from them. Some private lenders may modify their terms and conditions according to the situation of different borrowers- this attitude is unfair because an individual with more financial independence may be cheated by the private lender. You need to be aware of the terms on desired terms of loan and exit strategy.

3. Reasonable interest rates

One of the most important factors to consider when choosing a private loan giver is the type of interest rates they offer. The quicker access to funding usually make interest rates higher with private lenders than what obtains in banks. This does not mean the interest rates must cause untold hardship for you. Any interest rate higher than 15% may be too much on personal loans, hence you may want to consider other options. Though quicker funding and greater risks are associated with private lenders you deserve a reasonable interest rate on loans too.

4. Make sure you assess your financial situation

The first step you need to take when searching for a private lender is to check your personal financial situation. You need to compare how much you make on monthly basis, your monthly expenditure and how much you can afford to repay your debt. You need to have a comprehensive plan on loan repayment before you repay your loan.

5. Concentrate your research on local lenders

Local private lenders have more understanding of the situation of their region, hence they can provide a personalize lending service that will take into consideration the plight of borrowers, hence they may reduce their interest rates and extend the repayment terms. Though you can find private lenders across the entire country, having a local lender will bring you face to face with the localized lender and the terms for the loan may be reviewed and designed to meet your needs.

There are several benefits you should consider for getting a short or long-term loan from a private lender, perhaps the most important one is that they do accept borrowers with lower credit score, especially those who will find it difficult to obtain a loan from the bank or some other traditional financial institutions.

Asteria Lending has become one of the most trusted and reliable lenders in the world today. It offers a prompt processing of loans, and respond to all inquiries within the shortest possible time, which makes its service one of the most sought-after today. Asteria Lending offers flexible terms of loan approval and repayment, according to your personal needs.

Learn more about Personal Loans.