If you’re tired of investing with the big banks – and tired of the measly yields they offer – it’s time to consider private lending. Private lending is one of the oldest, most proven forms of investing. it’s a great way to make some extra cash on what you already have while helping someone else with their finances.
When you invest in a private loan, the entire process is managed for you. No waiting for the following quarterly report of your stock portfolio, no worrying about whether that tech startup is going bust. With a strong emphasis on transparency and investor protection, they offer professionally screened loans, intelligent defaults and have an ongoing dialogue with investors so you can manage your portfolio from start to finish.
Private lending is a quick, convenient, and confidential lending option for your family or business loans. Access to funds typically takes only a few days rather than weeks or months. Like other conventional loans, private lending is based on the borrower’s creditworthiness, the amount of the loan requested, and the repayment method requested by the borrower.
How Does Private Lending Work?
The private lending process differs from traditional bank loans in several ways. If you’re interested in learning more, take a look through our timeline of the steps in getting a private mortgage loan and how they’re different from getting a conventional mortgage loan.
The first step is to apply for prequalification, which will help you understand your qualifying price range. Your pre-approval letter can be used as leverage when talking with Private Lending Specialists, who will match your loan needs with potential lenders in a matter of days.
When you’re ready to find your dream home and make an offer on it, Private Lending is here for you. They understand the importance of speed. They can get you a proof of funds letter the same day, sometimes within only a few hours, depending on how quickly we can get the information from you that we need to issue it.
If your offer has been accepted, private lenders will work with you to get your appraisal and inspection done quickly not to hold up completing the purchase.
Here are some steps to know how you should be a private lender.
A historically proven strategy
Private lending is a great way to generate profits and cash for your business. Loans have been around since 3000 BC and have always been a popular form of doing business. Interest rates are typically much higher than the rates offered by most banks, but this means more profit for you.
Lots of investors enjoy the thrill of the stock market, betting that the price will rise (and sometimes even fall). But it’s not for everyone. Consider becoming a private lender if you’re looking for a more predictable way to invest your money.
It’s just like any other type of investment with one exception: you agree on terms with an individual or business, put down money that they agree to pay back at regular intervals, and that’s it!
Excellent cash flow
Private lending is an ideal way to earn even more interest in your money without the unpredictability of buying stocks. When you lend money to individuals and businesses through websites, you get the financial security of fixed interest rates, but with a potential for a higher return than what you’re earning at a bank. And if interest rates go up, yours will, too!
A secured investment
A private loan is an investment opportunity to lend money directly to a borrower for that person’s needs.
Examples are a down payment on a home or to help expand a business. By structuring the loan as real estate, the risk level for you – the lender – is substantially reduced; the property serves as collateral. This makes it easier for you to earn more on your investment and reduces the risk of losing money.
Diversification is a fantastic strategy to help protect your investment portfolio. Still, it can be very hard in practice, as many investors have a hard time spreading their money out amongst different asset classes.
Luckily, through private lending and real estate investments, it is very easy to diversify because each real estate investment has its unique features or benefits that make it valuable, and you can quickly invest in multiple ones at once.
Whether you’re purchasing a house, wanting to consolidate your debts, or improving your credit score with a remortgage, a private mortgage could be the answer. Essentially it works in much the same way as applying for a bank loan, except that it’s quicker and much easier.