Things to Consider When Seeking a Private Money LenderThings to Consider When Seeking a Private Money Lender
Lending is a concept that has been there since time immemorial. It is a concept that enables people to grow their businesses to greater heights. Loaning is the act of giving a business entity or person some money for them to use and return it on a later date, inclusive of interest. There are different lenders in the money market, such as institutional and private money lenders.
The most popular institutions that lend money are banks. Banks lend money per the ability of the person to pay back. Besides banks, private entities such as Sacco’s, credit institutions, and loan sharks can lend money. Here are some things to consider when seeking a private money lender
Interest Rate
The biggest determinant of where to borrow money is the amount of interest you will pay when settling your debt. Different institutions have diverse interest loans that depend on various factors. Some of these factors include the loan amount and the time you need to pay the money back. If one seeks a quick loan, they will have to settle for a high-interest loan. This is because private money lenders act on the fact of the desperation of the borrowers.
Period of Payment
Another big factor to consider is the time to pay back the loan. Some institutions give a fairly short amount of time to pay back. Knowing this, one should assess their situation and settle for the moneylender with flexible payment periods and negotiation a grace period before one pays the money back.
A good way of doing this is by forming a reverse ledger that calculates monthly payments until when one settles the debt. It’s advisable not to take a huge loan with a short period of payment.
Additionally, read through the paperwork that is normally signed when the money being borrowed exchanges hands. Due diligence is a trait one needs to have when analyzing the fine print and understanding it fully.
Collateral
Another thing one needs to consider is collateral, which is a deal-breaker in lending. Some institutions of lending require one to post up an item for collateral in case the borrowing party cannot pay. Sometimes the value of the collateral is way higher than the money being borrowed. It is a tactic that is used by lenders to secure their money from getting lost.
Therefore, when you are seeking a private moneylender, you need to consider the interest rate, period of payment, fine print, and collateral.…