Everything was going fine until your car broke down. Like about 64% of Americans, you live paycheck to paycheck. So, there’s no money for car repairs!
You keep seeing ads for private loans all over the place. But is it smart to get private lender loans? What should you know before signing any contracts?
We’ve put together a quick guide with the top 5 facts you should know before going to a private lender for a loan. Keep reading to find out if a private loan could help get you out of a financial rough patch.
1. Length of Private Loans
Most private loan terms state that you must pay back the money within six to twelve months. You can also get private loans with terms as long as two to three years if you look hard enough.
If you get stuck in a bad spot, you can also get an extension on the loan term length. Ask the lender for an extension anywhere between six and twelve months more than the original loan terms.
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2. Private Lenders Are Businesses
It’s important to note that these lenders run a business loaning people and businesses money. They charge fees and interest so they can make money off every single loan they give out.
3. Many Uses for Private Lender Loans
Most people and companies take out private loans for house flipping. But, that’s not the only thing you can do with the loan money!
You can rehabilitate a house, buy new equipment, use the money to continue operations, and for more inventory. Your imagination is the limit!
4. They Have High-Interest Rates
Many times the private loan is a major risk for the lender because they may not get their money back. That’s why they charge high-interest rates on the loan principle. It’s not a way for lenders to prey on people who need money in a pinch.
5. Small Businesses Can Get Loans Too
Some people think private loan means that only private citizens can get them. This is untrue! But what is a private lender to a small business?
Small businesses often have a difficult time getting loans from banks and other traditional lenders. But, a private lender is often like a hero allowing the small business to get a hard money loan.
Don’t Let a Financial Hiccup Derail Your Life
Everyone wants to have enough savings to handle an expensive unexpected bill. But, it happens sometimes and you need to know where you can get money fast!
Keep this article in mind during your loan search. That way, you know you’re getting the best loan for your situation and not making a decision you’ll regret.
We hope you enjoyed reading this article and that you now know some important facts about private lender loans. For more informative articles about small businesses and financing, check out the rest of our blog today!