The number of borrowers who prefer licensed money lenders over banks has grown in recent years. That is because banks are associated with strict borrowing and underwriting conditions, which bar many prospective borrowers from being able to take loans. Despite the fact that loans offered by a legal money lender have a significantly higher interest rate, many borrowers prefer the lenders because securing loans is much easier. Here is why you should consider seeking loans from a licensed money lender instead of a commercial bank.
When dealing with private lenders, it is easier to discuss flexible repayment terms than it is with commercial banks. Most lenders even allow you to reschedule the payments if you experience an unforeseen circumstance that makes it difficult for you to make timely payments. Nonetheless, you should avoid losing the trust accorded to you by the private lender. That means you must satisfy all the financial obligations that you have towards the lender so that you do not damage the relationship.
The debt service coverage ratio of private lenders is less strict than that of commercial banks and credit unions. There are also fewer limitations because private lenders do not have similar underwriting processes as traditional lenders. Therefore, they have more adaptability since they can consider other factors that influence loan repayments, unlike commercial banks. Borrowers’ credit score is also not a key determinant in private lending.
Licensed money lenders give you more access to all types of loans due to the flexible nature of their operations. These loans offer you benefits that are similar to those of traditional loans. The process of applying for the loans is simple, which means that you can get the money as soon as you need it.
Since the loan qualification process in private lending is a quick and less complex, a borrower can secure funding more quickly. Obtaining the loans is even easier since borrowers are only required to surrender titles to the lender. Besides this, there are no detailed lending requirements, which means that the borrower and lender can agree on terms that suit them best without necessarily involving third parties. Therefore, less money is spent on closing costs and legal fees that are associated with mainstream loans.
Despite the fact that licensed money lenders offer flexible loans, this line of credit has a substantially higher interest rate. The loans are also short term, something that limits you from accessing a huge loan. Depending on the loan to value ratio, you may be required to cross-collateralised so that you obtain the entire requested amount from a licensed money lender. It might, therefore, be difficult for you to get a loan if you do not have enough assets.