So you've found the perfect investment and you're ready to make a purchase. The problem is that you don't have the cash on hand. You could go to a second-rate financier who only wants to earn money off the interest of your loan. But there's a better alternative: hard money lenders. Their collateral-based loaning program and low rates always make them a better option, and here's why.
No Credit Discrimination
Most loan rates are based off the applicant's credit score. That means if you've made a few mistakes or haven't built the proper history, you'll be paying more over time. There's no way to avoid a multi-month or even multi-year loan term with most big investments. Inevitably, you'll be paying interest in some form or another. And that's not to mention all the additional fees that are affixed to the process.
A hard money lender isn't interested in your credit rating. They base their decision off the collateral offered and the project you are trying to fund. If you have a great idea, their team of investors will recognize this potential and seek a way to help you succeed. They aren't concerned with shutting down your ability to borrow, but more with the way in which you plan on successfully investing their funds.
Incredibly Low Fees
A hard money lender is well aware of the inordinate fees you will pay at a typical bank or other institution. That's why they not only offer competitive rates that are based off of a flat percentage, but they also eliminate a great deal of the "hidden" fees you would pay elsewhere. They aren't interested in taking your money or crippling your ability to succeed. In fact, they aim to do quite the opposite.
Let's say you're a property developer and you're ready to expand into an area of your city that you feel has untapped potential. You've done your research and you have a solid business proposal for an entire complex that would create jobs and businesses in the area. Your dedication and efforts to contribute to the economy already give you an edge, but your solid idea will win you a loan amount that correlates to your needs. Not only are these private companies much more interested in your business success, but they will also give you honest criticism if they feel your plan has potential holes or failings. Even the process of discussing funding with a hard money lender could be exactly what you need to get your project off the ground.
Collateral Determines Loan Amount
Your collateral is a big part of the way a hard money lender will address your needs as a borrower. If you have high-value real estate in your portfolio, you have a great opportunity to borrow an amount that correlates to its value. Even high-value property like precious metals, minerals, or even cars and collector's items will all be considered as a solid support for your request.
Some institutions have more elaborate requests as your loan amount exceeds 100,000. Your assets and holdings in the form of stocks and bonds, as well as your business itself, might be used as collateral. Just keep in mind that if you're borrowing the money for the right reasons, these institutions want you to succeed. There's no reason to fear you'll lose any of your collateral.