Private Lender’s Loan
Private lender’s loan is sometimes known as signature agreement. This is a type of loan which is given to a borrower just on his good credit and the borrower is not required to put up any collateral against the loan. A private lender’s loan can be extremely useful when a person with good credit is seeking quick funds. This loan can be used for any sort of financial need and is considered to be one of most sort after loan types.
Many borrowers who do not have their homes or people who want large sums of money urgently are the ones who opt for private lender’s loan. People who do not have a home, do not have the means to apply for home equity loans and private lenders are always willing to give them a loan. However, it has been seen that many home owners prefer a private lender’s loan than tapping on their home equity. This could be because a private lender’s loan has less paperwork, approval is faster than a conventional loan and, above all, the home owner does not have to put up his house as collateral.
The amount a person gets in a private lender’s loan depends on his credit history and earnings. The loan has to be repaid within 3 to 5 years and loan amount varies from $1,000 to $3,000. The lender would invariably ask the borrower to furnish a pay stub and will do a credit check. If the bank is satisfied, the borrower could be eligible to get 4 times his monthly salary.
Since private lender’s loans are given without collateral, banks charge a higher interest rate, which can range anywhere from 12 percent to 20 percent. If you look closely, you will realize that though the interest rates are high for private lender’s loans, they are still lower than the interest rates charged by credit card companies.
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