This article originated at: Poor Credit Auto Loans Tips
Normally, moneylenders will give financial loans to folks without any or poor credit background who’ve been declined by a traditional bank. Many folks don’t understand it but a private money lender serves a very important role being an entrepreneur by taking on uncertain ventures others don’t want to. These kinds of private investors will offer loans based on the borrower’s assets as well as capacity to pay, and usually will not be concerned with their credit standing.
Something different about private money lenders is that they can be rather flexible in the types of loans they offer depending on the borrower’s needs. Once terms are agreed to, however, private lenders will usually be very strict about upholding those terms. Some are more lenient than others and it may pay to get some referrals to previous customers of the lender in order to gauge how flexible they are.
Finding a private lender will be more difficult than locating a good bank since they are not as common and may not have as visible a business as a bank. Some people have good luck finding a money lender using a directory. Another way to find one is to ask the local realtors in your neighborhood. Yet another way to find them is a search on the internet. You’ll find many advertising their services there.
After you find the right lender you will most likely be required to fill out a loan application. It will tell the lender what your finances look like and what you’re looking for in terms of a loan. A Statement of Information form may also be required by some lenders. This form is used to do a title search to determine who the rightful owner is (hopefully the borrower).
To shield from risk of the borrower not paying the loan back, private money lenders require that a form of collateral be offered. While the lender prefers of course that the borrower make payments as agreed, he will make more money that way, he must also ensure that he will make money in the case of foreclosure on the loan.
A significantly higher interest rate is usually charged on these loans because of the much higher risk associated with them. It is not uncommon to see rates of interest over ten percent and even higher to twenty percent or more. A lender may charge more points than a regular loan too.
You can get a hard money loan for many different purposes. And money lenders will often specialize in one particular niche. Some work exclusively in residential real estate lending while others deal mainly with commercial real estate investors. Still other lenders will grant personal hard money loans for whatever the borrower wishes to spend the money on. Hard money is generally best used, though, for investments that have cash flow such as rental real estate.
A bridge loan is another kind of hard money financing. Sometimes homeowners will use them to “bridge” their finances if they face foreclosure on their original mortgage.
The original post is located here: Hard Money Lenders Give Loans To Individuals With Bad Credit