Consider taking out a loan with a private lender instead of with a bank to save you time and money.

Unfortunately, not everyone on this earth is qualified to receive a loan from the bank. A history of bad credit, no credit and high debt in your portfolio can really stack the cards against you, lowering your chance of being approved by most financial institutions. So what should a person do if they can’t receive money in the “typical” way? Those that often have a hard time borrowing money often turn to private lenders which are also referred to as hard money loans.

So what exactly are the benefits of private lending? Glad you asked. Read on to learn the benefits of private lending and hard money loans.

Fast Money

If you have ever been to a bank (I’m guessing you have) you already know it’s a slow process to get anything done. Something even as simple as depositing money takes time! Now if you’re going to a bank in hopes of securing a loan , boy oh boy are you in for a wait! Going in for a loan not only requires multiple bankers to approve the loan, but it often requires you to fill out paper upon paper and form upon form. When the process is all said and done, there isn’t a guarantee that the bank will approve your loan and the opportunity might come and go.

Private loans are different.

Private loans generally take less time for you to be approved for the loan, which allows you to use your loan money quicker. This time saving process can allow you to act on more opportunities and even gain an edge on the competition through speed and execution. Please note that the cost of convenience for being approved for fast money is typically paid with higher interest rates.

Flexible Loan Terms

For those that don’t know, defines a loan term as “a period over which a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term.” If that was a little to wordy I’ll break it down for you: a loan term is the time you have to pay back the loan before taking next steps.

In the banking world, the bank controls the terms. They typically aren’t as flexible as private lenders and expect you to pay on their conditions without fully examining the realties of your business. Private lenders take on a different approach.

Private lenders can offer you more flexible terms on the loans they give you because they aren’t handcuffed by bureaucracy. Additionally, private lenders often take a more personal interest in you and your business! Great private lenders will look for terms to benefit both themselves and you. If you want more flexibility on your repayment, a private lender might be for you.

Private Lenders Usually Don’t Have Prepayment Penalties

In the fine print of most bank approved loans you’ll find the words “prepayment penalty”. This means that, in certain cases, a bank will charge you for paying back your term quickly! This can be a frustrating hidden fee that can leave a sour taste in your mouth.

Private lenders typically don’t have prepayment penalties. There primarily concern is simply receiving their money back. Regardless of who you choose to go with, read the fine print to avoid hidden costs.