What Kind of Loans Exist and Which Ones are the Best for You?

In a fix and need some money quickly? You’re not alone. It’s something many of us have been through. Thankfully, there are more ways than ever to get that money you need these days. While you might be able to sell something or find some other way to raise capital, one of the best and most effective ways to raise large sums of money these days is with a loan.

However, simply getting a “loan” isn’t that straightforward. If you’re new to this sort of money-management, you probably don’t know where to start. The reality is that there are so many different types of loans knowing which one is right for you can be a bit confusing. Thankfully, you’re in the right place. In this article, we’re going to look at a number of different loan types so you can have a bit more info on whether they’re right for you, and how much they might end up costing.

Short-term income loans

These sorts of loans are getting more and more popular. You might have seen adverts for them on television or even some stores popping up in your local area. If you need money quickly, they can be an effective way to tide you over until you next get paid. That’s what these loans are designed for. They aren’t really for longer periods of time, as interest rates can be very high.

Obviously, you’ll need to have a job to get a payday loan and your earnings will be checked to determine how much you can borrow. Make sure you pay this sort of loan back as quickly as possible as the fees and rates can be really high, and you could get into a situation of spiralling debt. While you won’t be able to borrow a huge amount with these loans, it could be a quick way to get some useful money. And they’re reasonably easy to qualify for. These loans can be one of the better if you need quick money.


You probably know about mortgages already, but not everyone knows that they’re a type of loan, too. These loans are predominantly for buying houses and normally have payback periods of 25-30 years. You’ll end up paying a lot more than the value of the house in the long run, but there often aren’t really any other options if you want to own your own property, as up-front costs can be huge.

The good news with mortgages is that the rates are very low. That’s because it’s got such a long repayment period and because the risk is relatively low for the lender (they can take your property if they have to). However, mortgages have become slightly harder to get in recent years since the credit crunch. Before then, almost anyone could qualify and you could often get massive multiples of what you earn. Mortgages are one of the more well-known revenue based loan options around.

Nowadays, lenders are a bit more careful. You can generally borrow around 5 times your yearly salary in a mortgage. This can vary a bit for families and other types of borrowers. One important thing to remember with mortgages is that you will still need a deposit. Most lenders these days will need about 5% of the total value of the property. Paying a bigger deposit could get you even better terms.

Traditional bank loans

If you just want a medium amount of money (more than a payday loan but way less than a mortgage), you could simply try a traditional bank loan. These are often overlooked these days with tons of different ways to raise capital, but they could still be viable. These sorts of loans should be seen as medium-term options. They won’t have rates as low as mortgages but should be a bit better than payday loans.

You will have to qualify for this sort of loan, and that isn’t always straightforward. You might need to tell the lender what you need the money for and you will have to show proof you’ve got the means to pay it back (normally a history of your earnings). To improve your chances, you might be able to put something up as collateral (like a vehicle).

Business loans

If you’ve got a business that you need money for, that’s a whole other area of financing. Most of the advice so far has been for individuals rather than businesses. Business loans can work similarly to traditional bank loans and might afford you a reasonable sum with acceptable medium-term rates.

The amount you can borrow and your likelihood of getting accepted will depend on the sort of business you’re running and what your cash flow is like. Lenders generally prefer to give money to established businesses that are doing well enough to pay them back.


You don’t want to use your overdraft to get money unless you have to. You could be charged huge rates. Your overdraft should be a last resort unless you’re absolutely desperate for money, or if you’ve got a 0% fee overdraft.

Credit card

Again, credit cards aren’t a great place to take out money in the long term. The best way to use a credit card is to treat it like a debit card and pay it off each month. The only exception to this is if you can make the most of an interest-free period. Even then, you need to be careful.

Pawn shop loans

If you’ve got an item of value that you don’t need but would still like to keep long-term, you could sell it to a pawn shop. Just make sure you buy it back in time (it’ll cost more) or they’ll be free to sell it on.

Funding clubs

If you’re a business and don’t want to use a traditional loan, you could look at funding clubs as a new innovative way to get capital.

Business investors

If you don’t want to pay loan rates but are happy giving up a portion of the equity in your business, you could try finding a business investor. These types of lenders will look for businesses with great potential, and you’ll have to give up a fair percentage, but you could also get some additional expertise to help your venture thrive, as well as money.

Life Loans – What You Need To Know About Personal Loans

As we age, taking on debt is more serious than not paying your parents back that couple of hundred dollars needed to float you through the end of the term at university. The personal loan becomes more than borrowing an extra fifty dollars from your sister to buy those new jeans. While you can skip out on your family, skipping out on a personal loan can have serious consequences for your financial health.

Because debt is so commonplace, more specifically personal loans, a person can get pretty much anything financed with the right income and credit score. Furthermore, it can be a good way to establish credit history, so when you do have to make major purchases down the line you have established your creditworthiness. Finally, online tools have created pathways for consumers to learn about the many different types of personal loans and how to leverage debt to your advantage.

Let’s take a closer look at what you should know before taking out a personal loan.

What Exactly Is A Personal Loan?

Personal loans can be used for just about any purpose.  Repairs or renovations to a home, financing a trip, making major purchases, and any project or purchases that benefit the person applying for the loan. Most are unsecured loans that have very strict requirements. For example, a Latitude personal loan requires applicants have proof of employment and a good credit history, as well as other requirements. While typically most loans are more difficult to qualify for than your standard credit card, the loan program might vary depending on the financial institution.

What Are Common Features Of The Personal Loan?

The personal loan usually has a fixed interest rate determined during the application process. Loan amounts can run as little as a couple of hundred dollars to as much as $50,000. Because the rates are fixed, the payments are fixed as well and typically last anywhere between one and twelve years.

While most rates are fixed, there is a chance you will come across variable interest rate loans. The disadvantage of these types of loans is your payment fluctuates as the interest rates do, and while at first, the rate might be extremely low (and the payment), if the rate increases your payment might balloon as well. In any case, shopping around can help you determine whether a fixed or variable rate loan can help you.

How Do Personal Loans Affect Your Overall Credit?

The personal loan can affect your credit in a few ways. For one, every time you apply for a loan, the application is treated as though you have opened a line of credit, even if you are not approved for the loan. This is significant because the application is treated like an open line of credit and it is considered when calculating your debt-to-income ratio. If looking to make other major purchases, you want to avoid applying to too many financing companies because every application lowers the amount of money you can borrow.

Then, the personal loan can help you establish, or conversely destroy, your credit report. Payments that are made on time establish you as good credit risk, and alternatively, late payments, delinquent payments, and charge-offs (not paying at all) can wreak havoc on your score. Finally, every mark on your report, including any loans, stays on the report for at least seven years.

Financial Acuity And The Personal Loan

As already mentioned, the personal loan is more serious than a credit card. At the same time, though, it can be used to establish credit history. If looking to make improvements on a home, purchasing a car, or any other major project, the personal loan is one of the most common ways to secure finances.

Do You Need Fast Cash? The Pros and Cons of Personal Loans

If you need fast cash, a personal loan is an option. You also need to worry about repayment and interest rates. Here are the pros and cons of personal loans.

Money problems keep 65% of Americans up at night.

Stressing over money isn’t only unpleasant, it’s dangerous too. Your body reacts negatively to high levels of stress. Cardiovascular disease, high blood pressure, depression, anxiety and more can all result from chronic stress.

Instead of worrying about paying your bills, maybe you’re considering getting a personal loan. When you use them correctly a personal loan could be the answer to your financial problems.

However, if you don’t use the loan correctly, you might end up in a worse situation than you began with.

We wrote this article to clearly define the pros and cons of personal loans. Read on to find out what the best choice will be for you.

Pros and Cons of Personal Loans

Before we explore the pros and cons of personal loans, we’ll explain how a personal loan works. These types of loans have fixed monthly payments. Usually, you will receive the money from a bank, credit union or online lender.

Annual Percentage Rates

Your lender rates can vary depending on the institution where you get the loan. You can expect a rate that falls anywhere between 7% to 36% Annual Percentage Rate (APR). The total interest you’ll pay along with extra charges create your APR.

Qualifying Factors

Lenders will qualify you for the loan using several different factors. One of the things they’ll be looking at is your credit score and credit reports. After they review your credit score, lenders will want to see your credit to debt ratio.

The better your credit the lower your rate will be. When you’re credit score is below 600 it’ll be difficult to find any lender. If you have a very low credit score, and you do find a lender, the rates will be extremely high.

Compare Rates

Before you choose your personal loan, you should do some shopping. Find a reputable company to help you with the credit review. Compare rates from different vendors and find the one with the lowest APR.

Be careful as you’re shopping that not every lender is running your credit score. You want to limit the number of times an institution runs your credit. Excessive credit checks will affect your credit score.

Now that you understand how a personal loan works, let’s look at the pros of getting one.

Pro: Personal Property Stays Safe

One of the best personal loan advantages is the peace of mind that you’re property is safe. A secured personal loan will not require you to back it with any type of collateral.

If you default on your loan you won’t have to worry about losing your assets. For example, other loans might require you to place your house or car as collateral.

In the event you can’t pay off your loan, the lender would get your house. You never know when a major life event will prevent you from making a payment. However, with a personal loan, you’ll know that you and your loved ones will always have a place to live.

Pro: Simple Application Process

Next, you’ll enjoy being able to conveniently apply for a personal loan. In the past, the application process was extremely tedious and difficult.

However, with the ability to use an online vendor, the application and approval process can take less than 24 hours.

Within a couple of days, you can have all of the money you need.

Pro: Consolidate Debt

Finally, your personal loan is helpful in consolidating your debt. If you have different types of debt, like credit cards, a personal loan could be your way of refinancing.

The Federal Reserve shows personal loan rates are going down while credit card rates are going up. The average personal loan rate averages around 9.7% while credit card rates are averaging close to 14%.

If you have a lot of credit card debt, you could get a personal loan to repay it. You’ll save money because you’re interest rate will be considerably lower. While 9.7% is the average rate for personal loans your rate could be as low as 6%.

The state of your credit, of course, will determine if your rate is closer to 6% or 9%. Once you’re debt free you can start building your financial future.

Now you know more about personal loan advantages. Next, we’ll explain the potential disadvantages of receiving a personal loan.

Con: Budget Concerns

Emergencies are usually the reason people apply for a personal loan. The urgency of needing the money right now is the guiding force behind their decision. You put your finances in danger if you buy a loan without reviewing your budget.

Before you agree to any loan, find out what the monthly payments will be. If the payments don’t fit in your current budget, don’t get the loan.

Con: Origination Fee

Interest isn’t the only expense your personal loan will carry. You’ll also be responsible for paying the origination fees. The processing of the loan costs the lender money so they charge you origination fees.

Normally the fee will range between 1% all the way up to 6% of the amount you’re borrowing. When you take out the loan you’ll have to pay the origination fees up front.

This can be especially upsetting to individuals who are tight on money. Having to pay a bill right away with the loan money received can seem counterproductive.

Con: Scams

Beware of all the scammers out there waiting to take advantage of you. Not every loan offer you’ll receive will originate from a legitimate source. Usually, scammers will offer you a fake loan to get your personal information.

Once they have your personal information you’ll be at risk for identity theft. Other scammers will even ask for an upfront fee to secure the loan.

After they receive the fee they disappear into the night. This scam even has a name, it’s called the “advance-fee scam“.

Guidance on Your Financial Journey

The pros and cons of personal loans will be different for every individual.

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Should I Get a Personal Loan? 6 Signs It Might Be a Good Idea

If you’re wondering; should I get a personal loan? Then this blog article’s a must-read. Click here for more info and see whether it’s the right choice for you!

Should I get a personal loan?

If you’re asking yourself that question, you’re in good company. From medical emergencies to car repairs to consolidating debt, millions of Americans are turning to personal loans as a solution.

In fact, a staggering 83 million people–or 34% of Americans–have taken out a personal loan in the past year.

That’s great for them, but what about you? Is taking out a loan the best way to handle your unique financial situation?

Here are six things to consider before you take out a personal loan.

1. What Are You Using It For?

Personal loans are classified as unsecured debt, which means you don’t have to put down any collateral to get it.

The good news is that most personal loans offer a lower interest rate than credit cards. This makes it a great choice for consolidating and paying off high-interest credit card debt.

If you’ve fallen on hard times due to medical bills, unemployment, or other factors beyond your control, this could be a viable way for you to get back on your feet financially.

Still, caution is needed. Lower interest rates might tempt you to take out a personal loan to finance a luxurious vacation or an expensive piece of jewelry.

Don’t do it! Debt is debt–and a personal loan is no exception. If you regularly get in the habit of buying high-ticket items you can’t afford, it’ll take more than a personal loan to bail you out.

2. How’s Your Credit Score?

Assuming you have legitimate reasons to take out a personal loan (not for a trip to Tahiti), what are some factors to consider?

A major one is your credit score. Lenders need to know that you’re trustworthy before they’ll give you money for any “personal” reason.

Think about it this way. A lender can repossess your car or your house if you fail to make payments, right?

But what happens if you fail to pay back a personal loan? Short of sending you to collections, there’s nothing they can physically take to repay the loan.

The better your credit score, the more trustworthy you appear to lenders. That’s not to say it’s impossible to get a personal loan if you have poor or average credit. You’ll just have to pay a higher interest rate for it.

3. What Are the Repayments Like?

Unlike a 40-year mortgage or other long-term loans, personal loans are generally capped at seven years.

That means that whatever amount you borrow, you’ll need to repay it in seven years or less (with interest).

In a financial pinch, you may not have much of a choice. But let’s say you’re taking out the loan to finance a large, expensive project, like a major remodel on your house.

How much will you need to pay back every month? Do you earn enough or have enough savings to cover the monthly payments? If the payments are too high, you could easily fall behind–and fall into even more debt than you started with.

If you’re unsure how much you need to borrow or what your monthly payments might be, a loan calculator is a good place to start.

4. Who Are You Borrowing From?

If you have a good working relationship with your current bank, that’s a great place to apply for a personal loan.

But banks aren’t the only option out there. Many credit unions offer personal loans with better interest rates and lower fees than major banks.

In recent years, online marketplace lending has also been a popular source for personal loans. It’s basically a digital “matchmaking” system that pairs borrowers and lenders quickly and easily.

Whichever avenue you choose, be sure you’re borrowing from a reputable lending company. The internet can be a powerful tool to get you the cash you need, but there are also plenty of loan scams out there.

5. Have You Considered Other Options?

A personal loan may be the best option for you–or it might not be.

Before you send in your application, make sure you’ve considered other viable financial paths.

For example, some people seek out personal loans to consolidate higher-interest student loans. This sounds great on the surface, but what are you giving up? Many student loans come with federal benefits or loan-specific protections that you’d lose by refinancing.

What if you’re trying to consolidate credit card debt? Shop around for a new credit card that offers a promotional zero-percent interest rate on balance transfers.

You might also consider borrowing from a Roth IRA or retirement account to temporarily cover your expenses. If you do, just make sure to pay yourself back when your finances stabilize.

6. Does the Loan Come with Hidden Fees?

Before you make any final decisions on a personal loan, be sure to read all the fine print.

Many lenders try to sneak in an insurance policy right before you sign a deal. They may even say it’s legally required for personal loans (it’s not, by the way).

If you choose to add such coverage to protect your family from a financial burden, that’s fine. Just make that decision because you’ve researched it and thought about it, not because you feel pressured.

Another question to ask the lender is if there are any penalties for paying off the loan early. If your financial situation improves quickly and you’re able to pay off the loan ahead of schedule, wouldn’t that be a nice option to have?

Should I Get a Personal Loan? Final Thoughts

As you can see, there are pros and cons to taking out a personal loan.

Because every financial situation is unique, your best bet is to weigh your options and make an informed decision.

Of course, “Should I get a personal loan?” isn’t the only important question to ask. To get (and stay) out of debt, you need to get in the habit of making smart decisions with your finances.

Click here for our latest insights into smarter ways to handle your money.

6 Things to Consider When Applying For Your First Loan

You should be educated when it comes to applying for your first loan. Follow our guide so you can easily understand and get through the process.

As of December 2017, all debts in the United States totaled a whopping $13.15 trillion. Mortgage loans top the list at $8.88 trillion, followed by student loans at $1.38 trillion. Auto loan debts rank third, totaling $1.22 trillion.

These figures show how dependent we’ve become on consumer loans. After all, they allow us to make huge purchases like homes and cars. Most of us don’t have the cash to pay for these all at once.

But this doesn’t mean a lender will approve your first loan application right away. That’s why it’s important you know what to consider before taking out a loan for the first time.

Don’t worry though, as we’re here to help educate you. Keep reading to learn about first-time loans and what you can do to boost your approval chances!

1. What Type of Loan Are We Talking About?

What exactly do you need the money for? That’s the first and most important consideration when taking out your first-ever loan.

Unless your goal is to become a home owner, then you most likely only need a personal loan. As the term suggests, this loan product is for personal expenses. That could be to cover moving expenses, medical bills, or even buying a car.

In the U.S., most people take out personal loans for debt refinancing or consolidation. As many as 55% of borrowers said they took out a personal loan for this purpose.

But you don’t have any “debt” to consolidate or refinance in the first place, do you? So, it’s possible you need money to pay for moving-related expenses.

What’s more feasible, though, is that you need it to cover medical bills. After all, out-of-pocket medical expenses now average $1,813.

But what if you need a loan to start a business? In that case, consider a business loan for startups.

Not all business loans are only for startups. Your business can also benefit from other types of loans, such as in the case of growth and expansion.

The point here is to determine if your need for a loan classifies as an emergency. Or in the case of a business loan, if it’ll benefit your organization in the long run. If that’s the case, then a loan may be your best option.

2. How Much of a Loan You Need

Once you’ve determined you do need a loan, next is to figure out how much you need. If you have enough time to save up some money, then it’s best you take that into consideration too. That way, you’ll take out a lower loan amount, which means paying less towards interest.

3. How Much You Can Afford to Pay Back (with Ease)

This is much trickier than determining how much you need. When figuring out how much you can afford, you need to look at your finances – both inflows and outflows.

Let’s say you earn $25,000 a year, which is the typical salary of a 23-year-old American worker. That’s about $2,080 every month.

Now, deduct your fixed expenses (like rent or fixed-rate utility expenses) from this. Make sure you don’t forget about your variable expenses (AKA electricity and water bills, transportation, grocery, etc.). It’s also a good idea to set aside something for emergencies or better yet, for savings.

Look at what’s left and compare that with your potential loan payments every month. Is the former greater or less than the latter?

4. Your Credit History

A common misconception is that people who have no loans don’t have a credit history. This isn’t always the case. If you have a credit card under your name, then you’re one of the 220 million U.S. consumers with a credit file.

But what if you also don’t have a credit card?

Don’t worry. There are still loans that you can get even with only a prepaid debit card. These loans, as well as payday loans, are a good option if you need access to funds as soon as possible.

It’s still a good idea to start building your credit history ASAP though. That’s because if you pose the question, “What do you need to get a loan?” to traditional lenders, they’ll tell you a good credit score is one of them.

A good place to start is with secured credit cards and student credit cards. Many credit card companies issue these cards to people with little to no credit. Once you qualify and start using one of them, you’ve already taken the first step to building your credit.

This is one way of figuring out how much you can afford to pay back. It’ll also help ensure you have enough to prevent even more financial setbacks.

5. Your Credit Score

Say you already have a credit history, thanks to your rent or credit card. In that case, you need to know where your credit score stands.

Lenders look at your credit history and score to determine your creditworthiness. If you fare well in both, then they’ll take it as a sign you’ll pay back what you owe them. So, the more impressive your credit, the more chances you’ll have of securing your first loan.

But only knowing that you have a good credit history and score isn’t enough. You have to make sure that it shows up on paper too. That’s why it’s best to request a copy of your report to make sure there are no errors in it.

6. Loan Terms

Loan terms vary from lender to lender, from interest rate to payments to other typical fees. That said, make sure you understand everything before signing the dotted line!

One of the most important terms of the loan you should know is the annual percentage rate (APR). That percentage will tell you of the actual cost of your loan every year. It’s different from the interest rate, since this only goes towards the interest you’ll pay every month.

Also, be on the lookout for loan origination fees, late fees, and failed payment fees. Some lenders also charge prepayment penalties, so that’s another factor to consider.

Better Understanding of Loans Increases Your Chances of Securing Your First Loan

Taking out your first loan doesn’t have to be a nightmare. It does require effort on your part though. Especially when it comes to building credit from scratch and comparing loan offers.

But so long as you consider everything in this guide, you can improve your chances of loan approval. As a final reminder, once you do get your loan, maintain healthy spending habits.


The Numbers Behind It: What Determines a Loan’s Interest Rate?

Nearly everyone need loans to sort out some financial issue at some point. The problem can be funding for impromptu emergencies. Some will prefer to take credit to fund their wedding or even birthday parties. But before you apply for the loan, you must check the set criteria for one to follow. Some of the reviews are discussed here.

Before you apply for a loan, you must check to gauge the best lending company you will go for. This may include their interest rates, registration fee, loan tenures among other things.


Interest is the extra cost you incur while repaying your loan. Interest is calculated depending on various factors like amount of money you borrow from them. Good lending firms will reduce the interest rates as you advance on the money borrowed. Therefore, the lower the amount, the higher the interest rates. So, before taking any loan, it is advisable to look for the firm that offers the least interest rates.

Some firms may increase the interest rates depending on the loan tenure. Short term loans tend to have higher interest rates. Big firms like the local banks may give a credit of as low as 10$ interest per year.  So, before taking any loan, ask this question, how long is it going to take? Respond by reviewing and choosing the best lender.

Research reveals that most small-scale lenders offer soft loans. This type of loan in most cases is very costly. Their advantage is that loan processing is very fast. You can sit in your office, apply online and within minutes, you’ll find money in your account. Be careful before taking this tempting money. You can inquire more on interest rates on sites like https://loanreviewhq.com/lender/lendingtree-review/.

Loan tenure

Some banks will give loan rates in line with the duration ranging from one month up to ten years and beyond. For example, student loans the interest rate will increase as you delay in payment. The truth is that all interest rates increase with time and the earlier you pay, the better.

Good loans are calculated annually. Loaning bodies that lend money on a weekly or even monthly basis are not worth going for. The total amount paid to let us say after one year is huge.

Registration fee

Avoid firms that require you to pay some fee for loan processing. What if you are not granted the loan? Because they determine whether or not to provide you with a loan. Secondly, going for a loan means you are desperate for money right?  Good lenders will advise you to open an account with them. This is right. The amount in the account may act as security in case you want an unsecured loan.



Sometimes things may not always work your way. What if you default to repay on time? What next. Before settling for the best lending firm, check their terms of service and steps that are taken to claim defaulted loans. Don’t go for the firm that will carry all your belongings to the auctioneers.

Bottom line

It is right to take a loan and settle your immediate financial issues. But before deciding on the best lending firm, carry out a thorough review of the firm. Make sure you answer questions like what are their interest rates? How long do they take to process and give out the loan? Do I need to pay anything to be given the loan?

The Disadvantages of Short-Term Loans

Short-term loans have been the shortcut to business financing for startups and small business that are in desperate need for business growth. During times of cash shortage, short-term loans have proved effective as it is easier to get and repayable within a short-term period. Even though this type of loan seems easy and is preferable due to its nature, it can also have disadvantages like high cost payment per month, borrowing cycle risk, early repayment penalties, and unsustainability. These disadvantages means that interested individuals should be careful while requesting for short-term financing.

High Cost Loans

Short-term loans always come with a high monthly payment and this can affect business profits as a bigger amount of money is required to pay off the debt, more than what is required from long term loans. It also affects the cost of a project as the short-term loans used for it incur high interest rates. Ensuring that money is budgeted to pay off these short-term loans is vital so as that no negative effect on the business happens. When settling on a business choice, it is critical to evaluate the circumstance, as no two circumstances are precisely similar.

Borrowing-Cycle Risk

Due to this loan being easy to obtain it can turn you to a regular borrower. In the event that repayment of an initial short-term loan is impossible, borrowing again might be considered to balance off the original loan, leading to a series of loans, which traps you and your business in a high-risk borrowing cycle. This risky process leads to inefficiency in businesses operations and it is advisable not to depend on short-term loans seasonally, as it has bad side effects on business productivity.

Early Repayment Penalties

Some lenders impose a contract that limits the repayments of loan at a specific period to profit from the loan. In some cases, repayment of loan at an earlier time than agreed might lead to high repayment penalties as the lender loses profiting due to early repayment. This prepayment penalty compensates the lender and leads to high costs and penalties to the loanee’s credit.


Dependency on short-term financing is considered bad due to its unsustainability on the long run. Even borrowing from a list of reputable lenders is not good enough. Small businesses or startups are all geared towards making profits from their operations. It is wise to access your business operations if you find yourself constantly taking loans to cover business expenses. If your business is not being productive it would be best to find other business opportunities other than taking short term loans.

At the end of the day, the decision rests on you to decide which direction your business takes when it comes to financing for business growth. Short term loans or long term loans also has its advantages but thorough assessment of business direction and determination of what is required for business growth and improvement will help guide you on the quest to a successful business operation and increased productivity.

The Top 3 Tips for Shopping for a Hard Money Loan

When people hear of the term “hard money loan”, they often think of loan sharks and shady dealings. But that is not the case nowadays. There are many trustworthy and legit companies like Maggio Capital Inc. – San Diego, CA that aim to help those people who are not able to qualify for bank loans.

Since there are so many hard money lenders, you should be careful in choosing the one that will truly assist you. Here are some tips to follow when looking for a lender.

  1. Check to see if any of your friends can recommend one to you – the first step you can do is to interview any of your friends or colleagues if any of them had ever gotten a hard money loan. You don’t have to just ask them for the company they got the loan from. but the whole process itself. Every company has a different way of processing their loan applications, and you want to be prepared with whatever documentation you have to pass. Then, ask them if they will be able to recommend their own lender. Get feedback on how the service was and of course the rates that were given to them.


  1. Do your research on what hard money loans are – before getting yourself a hard money loan, you will first need to understand what it is. Don’t go blindly into an agreement with first doing your homework and understanding the basics. Know what the difference is between a hard money loan and why it is different from traditional lenders, like banks. Simply put, a hard money loan is a short-term loan secured by real estate. Instead of banks, you will be funded by private investors and the loan term is shorter compared to traditional loans. Unlike in banks where the applicant’s credit rating is the primary concern of the lender, for hard money lenders, it’s usually the value of the property that they consider. So you should arm yourself with information on the industry standards and the types of property that you can use a hard money loan for. Some of the examples are fix and flip homes.


  1. Compile a short list of the private lenders you are eyeing and do your background check on them – even with recommendations from friends and family, it would still be a good idea to keep a short list of potential companies that you can go to for a loan. You should watch out for red flags in order to avoid . the shady dealers who might not be giving you the best deal. Schedule a time of consultation with them and ask them the process. You can tell that a lender is trustworthy when they can explain to you every step in the process so that you can understand what will happen. If a lender will not tell you right away the specific cost and fees when you ask them, and if they evade your questions, it would be best not to deal with them.
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