financed privately can be a godsend to someone who knows what
they're getting into (and has a clear, attainable exit plan)
- but they can also be a recipe for disaster if the borrower
doesn't clearly understand the nature of private lending,
because the high interest, fees and in general the high cost
of capital can easily sink an ill-prepared borrower...
private loan is money that is received by a borrower from
a private (or independant) lender with a fixed interest rate
and a maturity date. The terms of a private loan are typically
negotiated between the borrower and lender and are typically
specific to the situation. Private loans are taken out for
a variety of reasons, such as the following:
for an education. Some students find it challenging to
meet all of their educational expenses and require some economic
assistance in order to do so, in these circumstances they
rely upon student loans. The private student loan generally
carries both an interest & repayment relief period during
the course of their studies. Once they have completed their
studies however monthly installments commence in order to
pay off the debt in full. The key thing to keep in mind when
it comes to student loans is to ensure that youre going
into debt for a career that there is a demand for, its
fine to by interested in Phoenician history but going tens
of thousands of dollars to do so may not be the smartest idea.
a small business. There are several financial service
companies that offer their clients different types of small
business loan meeting specific business needs. These needs
can range from business expansion to equipment upgrades. There
are also lenders out there who work with specific niche groups,
there are some who look more favourly upon women while others
may deal more with new start ups, there are some who
prefer lending on receivables or new contracts. The key to
getting money if youre a small business is that your
overall business application and plan has to be convincing
enough for the lender to buy in.
the financial gap during an emergency. There are simply
times in life when, (excuse my language) but shit
happens. During these times of crisis there is just no way
out without getting a private loan in order to get through
things. Your needs during this time may be small enough whereby
a payday loan may be all this is required or may
be large enough where an unsecured private loan through either
a lender is needed.
off a higher interest rate loan. Another time that a private
loan can come in handy is for when you need to pay of an existing
higher interest rate loan. You may have entered into the original
bad credit loan because at the time your credit qualified
you for nothing better, but now your credit has improved considerably
and youre tired of paying the high interest rate.
consolidation. Private loans are also taken out for debt
consolidation; these are taken out by folks with both good
& bad credit. Sometimes good folks just find themselves
in bad situations where there debts haven gotten out of control
and unmanageable and they need to get a consolidation to get
a handle on things.
Rebuilding. Sometimes private loans are used by folks
with little or no credit or ones whose credit may have been
shot in the past in order to rebuild it. Not all lenders offer
credit rebuilding programs, but the lenders who do are generally
well versed in them.
a few things to keep in mind when it comes to private loans:
sure you can make the payments, I know this sounds logical
but you would be amazed at the number of folks who take these
loans out without being 100% sure they can repay them in a
sure they are short term solutions to short term problems,
especially ones that may be at higher rates due to poor credit
you shop around, not all private loan lenders offer the same
rates and terms. Keep in mind however that rates and terms
will differ due to your credit rating and overall situation,
if you have a D- credit rating you cant expect to get
A+ terms and rates, conversely someone with A+ credit should
not be paying D- rates.
sure you fully understand what youre signing prior to
ever putting your John or Jane Henry on the line. If youre
unclear as to some of the terms dont be afraid to ask
the lender to explain it to you until youre fully satisfied.
Also dont hesitate to run it by a friend, family member
and or professional.
a copy of your credit bureau in advance. You need to know
the good, the bad and the ugly stuff before approaching
any private lender but most importantly you need to ensure
its accurate and up to date. Simply doing this in advance
will save you both time and money in the long run.
offer both secured and unsecured private loans, unsecured
private loans have more risk due to the fact there is no underlying
asset securing the loan so dont be surprised by higher
rates for them.
the end of the day by doing your homework and getting the
right private loan that meets your needs can be a lifesaver,
but rushing in with little thought can turn it into an anchor,
the choice is yours!