Most people are familiar with traditional loans like bank loans, flex loans, and payday loans. They rely on two things to get you approved: Credit rating and income. Most of these loans take days or even weeks to get you approved, and if you don’t have the credit rating or income they require, it’s rejection after rejection. For folks who face a financial emergency and need money quickly, soft money loans just don’t do the trick.
Unlike soft money loans that rely on intangible things like credit rating and income, the hard money loan goes straight to the heart of things: Assets you already own. You can use these things that are already your property as collateral to get approved for the loan, even if you have a terrible credit rating or a small amount of income (just enough to cover the loan payments). This is a hopeful and good thing for people who need money quickly but simply don’t have the financial history they need to get approved for a regular loan.
Situations that are ideal for taking out a hard money loan include:
– Rent or house payments
– Car breakdowns where you must fix your car or face losing your job
– Medical procedures you can’t afford not to have
– Utility disconnection notices that must be paid
There is a long list of things that people use hard money loans for, so they’re not confined to just these few things. You can use your hard money loan for whatever you want to. There’s no limitations there. Unlike some bank loans that require you to put the money toward something specific, hard money loans are yours to spend. It might serve as part rent payment, part emergency food money, and part a little something extra you might want to buy with the money. As long as you repay the loan, everything is fine, but remember that you’re putting up your property as security for the loan. This means that if you don’t repay the loan, you might lose your property.
Is A Hard Money Loan Right For Your Situation?
Hard money loans are often considered last resort loans. This is because they require you to repay them in a short period of time and also come with the additional risk of losing a piece of your property. Higher interest rates are a hallmark of hard money loans because you’re going to repay the loan in a shorter amount of time and because it’s a high risk loan for the lender. If you don’t have the credit rating to back up your willingness to repay, they need a piece of property to make sure they get their investment back.
If you’re facing an extremely tough financial road ahead, and you don’t have good credit or a lot of income to secure a traditional loan, hard money loans can provide a line of credit for you that comes to the rescue in hard times. It’s these loans that continue to help thousands of people each year who couldn’t have gotten another loan otherwise. For these thousands of people who benefit from these loans each year, hard money loans are a Godsend that enables them to make it through an otherwise insurmountable financial crisis and land squarely back on their feet as long as they repay the loan. Speaking with a financial adviser can be helpful before deciding to take out one of these loans. Sound financial advice is at the heart of every loan decision.