Most people have a pretty warped understanding of private money lending. When they think about private money lenders they immediately think about payday loans, a type of loan that all too frequently preys on people who are in a horrible financial situation and who unwittingly sign onto a loan agreement that they’re never going to be able to satisfy because of incredible interest rates. There are a handful of ethical payday loan companies out there, but for the most part they prey on people who desperately need the money and who will agree to all kinds of crazy interest rates just to receive the short-term benefits of getting money.
However, payday loans represent a very small portion of the private money lending industry, and for the most part when people are talking about private money they’re talking about companies and individuals who supply loans to people who can’t receive such loans from banks and institutional lenders. For example, a person may be looking to purchase a home or a condominium but because of their credit score or a past bankruptcy they can’t get a loan from a bank. Such a person may be making substantial income and have enough money to make a down payment, but the banks and other institutional lenders still turn them away. This is where a high-quality and ethical private money lender can really help a person out. They’ll take a long, hard look at how much money the person is earning, how much money they plan on earning off of the property (if they rent it out or sell it), and how much money they’re willing to put down it. Private money lenders are more concerned with these criteria than with the person’s credit score. They believe that if the person is making enough money and if they have a substantial investment in the property (i.e. a big down payment), then they’re going to work hard to ensure that they pay their loan off. These are the criteria that an ethical private money lender is concerned with, and if a person meets these criteria then they’re more than happy to give the person a loan.
What people borrowing money from a private money lender need to understand is that these loans generally must be paid off within a relatively short time frame. Thus, it’s important that they find a private money lender who is going to be clear about how much interest they’re going to owe, what their payments are going to look like, and when their loan should be repaid by. As long as the borrower has this information and knows what they’re getting into, and they consult with the lender and determine that such a payment arrangement is something they’ll be able to handle, there’s simply no reason to not borrow money in this way.
If you’re looking for an ethical private money lender who will only lend to you if they strongly believe that you’ll be able to make your payments on time and in full, then Montegra Capital Resources is the company you want to choose.