Every individual or family may need personal loans from time to time. It may be for various reasons: the car broke down, the house needs some renovations, or their daughter is planning to get married in Spring. Regardless of the reason, money is needed as fast as possible.
The problem is that options such as credit card debt or bank loans aren’t always available. Once more, reasons may vary. It may be because you built up too much bad credit or you have no collateral to attach to the loan.
In these cases, a personal loan from a private lender may look like a very good option. They are fast, easy to access, and may overall improve your financial situation. And this article will tell you the top methods of getting a personal loan from a private lender.
#1: Figure Out If a Private Personal Loan is Your Best Option
Before going for personal loans, you need to learn the difference between public lenders and private ones. For one, private lenders aren’t banks, credit unions or financial institutions. They are simply individuals (or companies) with no attachments to a certain institution that lends money to other people. Those who receive a loan from a private lender usually have a certain relationship based on trust.
A personal loan taken from a private lender is different from other types of private loans, in the sense that you don’t need to specify why you need a loan. On the other hand, public lenders will categorise the loan based on your needs: student loans, car loans, mortgage loans, etc.
Keep in mind that personal loans are very different from payday loans. A payday loan will have to be paid very fast – usually within the first two weeks – and they carry a very high interest rate. A private personal loan will have a longer time frame and a lower interest rate – but will still be higher than the one offered by a bank.
There are also risks to personal loans from private lenders, such as shorter payback periods or costly fees. Most will require collateral to secure the loan. If by any chance, you find yourself unable to pay the loan, the lender will be entitled to sell that property to get his money back.
#2: Consider the Alternatives
The most important part of getting a personal loan from a private lender is knowing that there are other options aside from them. If the return of your purchase makes your loan worthwhile, then getting personal loans from a private lender might not be such a bad idea.
Still, before going for a personal loan, you may want to check whether you can use cash to fund that purchase or not (or at least some of it). This may reduce the costs in interest, resulting in a much smaller loan.
You may also want to evaluate all your alternatives. Consider opening a line of credit, or getting a public student loan. If the interest rate is more beneficial for you, there’s no reason for you to take out personal loans. Only do so once you’ve burned out all the other options and know for sure this is your best opportunity.
#3: Access Your Options for Personal Loans
When opting for personal loans from a private lender, you need to do your research on the options that they provide. You may want to focus on lenders that are accredited or have been approved by the government.
You can go for individual lenders or companies. Browse through your options, and see which one is a better way to start. After learning of all the options, you may settle on the one you believe is more convenient for you.
You should also try contacting your family, friends, or business acquaintances. They may be able to offer you a personal loan quickly, with a smaller interest rate. Still, you may want to make sure that there is also a written agreement next to your verbal one. And you should keep in mind that failure to repay this loan can result in damaging your relationship with your lender.
Once you have explored all of your options, collect all the documentation that you need. You need to appear as creditworthy as you can. Show your income sources, your savings, or any physical assets that you use to secure your debt.
Personal loans from private lenders can be tricky to deal with – but they are also convenient if bank loans are not an option for you. All you need to do is research your options and come up with a convenient provider. Contact us for a free assessment that has no effect on your credit file and get one step closer to a suitable personal loan.