Let’s face it.
Borrowing from a bank is a hassle. You go sit down for an hour, fill out tons of paperwork, and still don’t have certainty of approval. It’s a process not everyone looks forward to.
And here’s the funny part.
Some people never even consider side-stepping the bank and borrowing from a private lender. The ones who have, know the perks of private loans.
Have you ever taken a moment to think about it?
In case not, I’ll clue you in…
Flexibility
First up, flexibility.
With a brick-and-mortar bank, you hardly have any. On the private side, you can negotiate and structure the loan however you please. And if you don’t come to a compromise with one lender, you’ll find no issue searching for another.
It’s a convenience you don’t typically have with a public institution.
What’s even cooler is that you can also use real estate as collateral for the loan. The private lender feels far more comfortable loaning large sums of money when they have something to lean back on in case the deal goes awry.
And if you thought it ended there, think again.
With private loans, you can often find better rates. With the ability to negotiate, these loans end up better for both parties because you don’t have the rigid processes that banks always bring.
There’s more control and more flexibility in the private market.
Freedom
Private lenders will fund projects that banks will often reject.
This makes them a valuable method for some people, especially if they deploy certain real estate strategies like fix-and-flip. The short-term nature of that loan makes it less valuable to the bank regarding long-term interest collection, so they don’t like to do those deals.
On top of that (when you borrow from a private lender), you have fewer restrictions.
You can use the money for whatever you please if the conditions were negotiated with the issuer. Traditional methods of borrowing are sheltered by several standards and regulations, which gives you far less “wiggle room” than you’d have with a private loan.
Overall, there is much more control when dealing with private loans; it’s not comparable.
Accessibility
There are far fewer requirements with private lenders.
It’s a fact. A lot of the time, you only need enough equity, cash to pay monthly, and a decent exit strategy. That’s if you’re using the loan for a real estate endeavour which is quite common in the world of private lending.
Traditional banks need to see all sorts of metrics like credit scores, for example.
There’s less worry with private. Not only that but speed too. If the process were put in a race between public and private, it would be like the tortoise and the hare. Except, this time, the tortoise doesn’t win.
The hare (private lending) wins with ease.
If you’ve ever thought about applying for a loan, you should consider private lending.
Especially for real estate, it might suit you well.