Debt. It’s a dirty word, associated with credit cards and loans from loan sharks that have a 50% interest rate and demand a re-payment within 30 days. There are problems with debt. People have a habit of taking on a lot of it and not paying off the loan (or the credit card). These are significant issues. The average American has thousands in debt.
Debt can be associated with many things. First, there are credit cards. Credit cards are basically an open money line with a limit (sometimes hundreds, sometimes thousands of dollars). Individuals can use the credit card for every day purchases, as well as for emergencies.
For these issues, they are good. Credit card debt, though, is a huge problem in this country and speaks to the rising costs of goods without rising income levels. People feel the need to borrow more money to spend more, as their wages have not increased with the rate of inflation.
Debt, though, can be a good thing. Debt, for instance, is what’s needed to buy a house. It’s what’s needed to buy a car. It’s what’s needed to take out an extension of a business. Borrowing in these cases is looked at as a solid move, as it furthers the life of an individual, while not being spent on ridiculous and asinine purposes.
People can get into debt because they fall into hard times. They may feel they need to spend a great deal on their credit card because they are between jobs. They may feel like they need to spend on their credit card because they struggle to find the basic necessities to live. They may need holiday items.
But this leads to a horrible cycle where people get into trouble by only paying the minimum payment on a credit card. This minimum payment is generally a fraction of what the credit card balance is, and this can lead to an escalating cycle where more and more debt is put on a credit card but the minimum balance is still only being paid off.
Because of interest rates, this can lead people to max out their credit cards (reaching the maximum limit) or defaulting on their credit cards, which means being unable to pay them. They may take out a separate credit card to pay the debts on the first. This can lead to a horrible cycle.
But there are solutions. And they can come in the event of a hard loan. A hard loan is a kind of loan that is secured by a physical asset. This can be a house or a property, generally something of major value. The idea is that someone can default on a loan and their property will be taken away.
While this seems harsh, there are many positives about this kind of loan. It keeps people accountable for instance, which is a good thing. It also pushes people to handle their finances. Some statistics about hard loans are as follows:
- Hard money offers higher interest rates and lower loan to value ratios. Hard money interest rates can start at 15%, 18% or higher.
- Most hard money loans are secured by a property with 30% -50% equity, so the investor is well protected.
- Hard money deals are often sought after for their quick turnaround (usually within 7-14 days to process).
- Duration or payment period for a private loan is also shorter compared to the traditional loan which can usually go from 1 year up to 20 years while private loans can only be granted with duration of up to 5 years.
There are a few terms worth noting in this article. They are private hard money lender, private money loans, private money lender, hard money San Diego, hard money loans in California, private lender, private money, private money lenders, private money lenders California, hard money loans in California, and more.
A private money lender is an individual or firm that loans money on a private basis. This likely means that the private money lender will want a more serious loan, as they are not a bank and subject to certain bank rules. A private money lender might require collateral for the loan or an asset in place of the loan.
A private money lender may be off the books. They may not be.