Know The Difference Between Hard Money Loans And Private Money Loans


Hard money loans as well as private money loans, both offers financing on time for investors as well as business owners with wide variety of needs of financing. There are some differences between such types of loans. It is crucial to understand such difference to meet each credit needs.

Hard Money Loans

Hard money loans are allowed by businesses which have specialization in alternative loaning. Funds from these kinds of loans are received from private sources; lenders are managed and specialize in working with investors belonging to real estate, private borrowers and business owners. Hard money lenders focus on borrower equity rather than credit scores for making decisions regarding lending.

Hard money lenders usually have a pre decided criteria and loan terms. These work with borrowers who cannot find financing from any other place but they do not negotiate regarding repayment loan terms.  Rather they trust on industry standard formulas for finding out interest rates and plans of repayment which offer profit and also fair terms.

Private Money Loans

Private money loans are purely allowed to private lenders. They usually do not operate businesses and most often do not provide any sort of advertisement that their funds are available for lending. Most private money lenders are usually unregulated and do not follow regulations of lending industry regarding rates of loans and terms.

The criteria for loans also differ in private money lenders. As there is no standardized criteria, borrowers usually have less idea for accessing private money funds. These make large negotiation in their interest rates and repayment plans.