When it comes to choosing a private lender, you need to tread very carefully as there are a lot of less-than-reputable lenders out there. That being said, don’t let the small minority of charlatans put you off applying for a private loan as these types of lenders come with many advantages.
Often sought out by people who do not qualify for loans from a traditional lender for some reason or another, private loans are typically approved quickly and with minimal checks needed.
If you would like to go down the route but are worried about choosing a private lender, the below blog will tell you exactly what you need to do.
How much do you need to borrow?
The first question you need to ask yourself is how much money you need to borrow. Some private lenders offer higher loan thresholds than others so you need to know exactly how much you need before you start to look into lenders.
How long will it take to get the money?
The next question is how quickly you need your hard money loan to be approved and reach your bank account. As a general rule, private lenders carry out far fewer background checks than traditional lenders which means that you should be able to get your money fairly quickly, but you should still ask exactly how long it will take.
Is the lender licensed and insured?
There are a lot of unlicensed lenders and it is never a good idea to use one of these as this can put yourself or your business at risk. Instead, look for a private lender that is both licensed and insured as they will employ reputable techniques and practices.
What are the terms and conditions of the loan?
When it comes to loans from private lenders, loan agreements can vary greatly from one provider to another. It is vital that you understand the terms and conditions of the loan you sign up for as otherwise you may struggle to make your repayments.
As a general rule, private loans tend to have shorter repayment schedules so this is something to bear in mind.
What is the lender’s history?
Often overlooked, it can be a good idea to look into your preferred lender’s loan history to see their experience in private lending and to check their reputation in the industry.
If a lender does not have a lot of experience or they have a poor reputation, you may want to keep looking, as you don’t want to take any unnecessary risks when it comes to borrowing money.
What do previous customers have to say?
Lastly, it can be helpful to take a look at what their previous customers have to say about their services. Don’t just look at customer testimonials on the lender’s website as these tend to be a bit biased and, instead, check out customer reviews on independent review sites and third-party sites. Although one bad review is not the end of the world, multiple ones can be a red flag.
