How can I find reliable private lenders?
A private lender is an individual or a company that engages in the business of lending out money at a profit. They, therefore, charge exorbitant rates compared to other lenders in the industry. However, their terms of lending are flexible and better than the other lenders.
Tracking these lenders successfully is the trick here; most of them operate on referrals and word of mouth engagements. That is why it is challenging to find the desired lender. This article would, however, assist you to note the necessary steps towards finding a reliable lender, and tips on how to prove the lender is a legitimate one.
Steps on locating a private lender
- Browse through the internet about the private lending business.
By so doing, you are familiarizing yourself with the dos and don’ts and by extension knowing the requirements of private borrowing. You should not get into this field without prior information. However small it is, you should at least get in with an idea of what you are getting yourself into.
- Build a network.
Most of the private lenders are located through referrals. Therefore, it is definitely a good idea to cement your connections as well as get more ties in the industry to better know their players. You could start with knowing the industry professionals such as; the agents, investors, companies involved, lawyers, etc. also, your friends and family may have the necessary connections which matter and those that can help you easily locate a reliable lender.
- Submit your ticket.
Some websites are dedicated to finding private lenders for you. If you are interested to borrow money online, then all you need to do is to submit your request and get connected to the private lender of the field you are in. one factor which makes private lenders incredibly difficult to trace is the fact that they deal in different fields in the industry. Some are dedicated to real estate lending; others on business, mortgage, etc. getting one lender does not guarantee that you have to stop looking for the lender may not be best suited to deal in your area of inquiry. Furthermore, you should be checking to compare the services of a couple of them. Hence it is imperative to use the website to find your preferred lender.
- Contact the lender.
After you establish the kind of lender you want, take steps to contact them. This can be through the website or schedule for a meeting to discuss the business since private lending cannot be conducted online. Most loans advanced through this means usually require security or appraisal on it, hence, you need to physically meet for the lender to evaluate the worth of the property used as an appraisal and fix the loan amount together with the loan terms.
- Make your presentation.
This is the last stage after locating the lender. To finalize your deal, you need to pitch your project. And if the lender likes it then you start the approval processes for the loan. You have to come to this stage with full information about your proposal and the shape it would take once you receive financing. This is because; the lenders want so much to alleviate the risk factor. And the better you keep them at ease with your project plan the better and closer you are to receiving financing.
Consideration points in selecting a private money lender
Private money lending business is a complicated one; if you happened to get it wrong then you will experience its dark side. Otherwise, these are some of the factors you might want to consider while choosing your private lender;
- Lender specialization.
Most of the private lenders are specialized in a particular niche. Therefore, while shopping for these kinds of loans, you would want to consider noting the field your lender is specialized in before you settle for business. Based on the type of property you want to finance; you will get a lender of certain specificity.
- The experience of the lender.
This factor plays a central role in your selection exercise. You definitely want to be able to trust your lender’s ability to deal with different situations were they to arise. Therefore, while doing a lender preview, you should settle for one who is best suited to understand the situation you are in and deal with it accordingly.
In private lending, the interest rates are not regulated. Hence there is no regulation put forward to be able to cap the rates were they to go above the provisional rates with the central bank. This situation, therefore, implies that every lender is likely to have distinct rates. So, when doing your shopping, identify a lender with a lower rate. Although, in this business, the rates are basically determined by your creditworthiness. Alongside this, your equity in the loan security you provide as collateral has a bearing too. The best option would be to do extensive research and considerations before settling with one lender.
- Costs and fees.
Just like rates, costs and fees differ widely from one lender to another. Therefore, it would be a good idea to shop for the least possible fees and costs that are being charged. The cost of borrowing is usually hiked by an increase in the chargeable fees. Some charge processing fees, early prepayment fees, insurance fees, etc. you might want to look out for these kinds of costs from your lender just to be clear about the amount repayable.
In summary, private lending is an investment that involves financing other investments. Lenders loan their capital out to other individuals who are prospective investors. Usually, these loans are advanced to individuals against asset security. And, the more equity you have in the property, the higher your chances are to get financing. It has been clearly indicated that the rules that govern conventional financing do not have the light of day in this venture. Therefore, it is not easy to locate a lender unless you have once dealt with one.
If you haven’t, then probably your option is to get them online. This might be a great idea, but you run the risk of finding unreliable lenders or cons ready to pounce on the situation. the surest way is to check out and compare their rates by visiting www.loanadvisor.sg/best-money-lender-singapore.