Securing financial assistance, through non-traditional lenders, is the other way for business owners and real estate investors to finance their operations and purchases especially in the economic challenges of today. These non-traditional lenders give loans with lesser restrictions and better lending terms compared to traditional lending companies like the banks and mortgage brokers, and so they are very good options. Non-traditional loans have two kinds, the hard money and private loans. The differences between hard money and private money lenders are sometimes not fully understood by borrowers. Read more great facts on private money loans FAQ, click here.
So let us simply discuss the differences between hard money and private money loans. Investors and business owners are given a timely and a variety of financing needs by these non-traditional lenders. Since there are differences in these non-traditional loans, it is advisable to understand these differences so you can decide which type can best fit your needs.
Businesses specializing in alternative lending are better off in getting hard money loan. The financing money of hard lenders originates from private institutions. Hard money lenders are lenient to borrowers, who cannot easily get loans from traditional lenders, by giving them easy terms as to when they can pay the loan. To be able to provide fair terms to borrowers, the hard money lender will base its interest formula and payment scheme on the industry standard at that time, at the same time earn profit. For more useful reference regarding private money lending, have a peek here.
Private money loans, as the name shows, are offered by private lenders or individuals. Not advertising and not a business are the two ways how the private money lenders operate. The lending industry has a set of regulations about loan rates and terms, but most private money lenders are not covered with these regulations.
Since there are not criteria or rules among private money lenders, borrowers are left on a shadow most of the time if they can get the loan or not. To be able to get this loan, you have to negotiate more than talk about rates and repayment plans.
It is sometimes difficult to choose between these two loans, but several borrowers find hard money loans better since it is based on the regulations of the lending industry.
Available in hard money loans are its various kinds to choose from. To enumerate, these are gap loans, fix-and-flip loans, and commercial rehab loans. Gap loans provide the money needed by borrowers in bridging the financial gap between their available funds and their expenses. Borrowers who want to buy properties in trouble to reform them and put on sale for a profit, can benefit the offer of fix-and-flip loans. A kind of loan that borrowers can avail of if they are into buying and rehabilitating commercial properties on the low, is the commercial rehab loans.
The loan you have in mind could be out of consideration in the traditional lending institutions, and thus you would opt to get the hard or private loan. Please view this site http://www.wikihow.com/Get-a-Personal-Loan-From-a-Private-Lender for further details.