Despite the growth in technological advancements, the 21st-century world is facing many problems. One of these problems is the economic hardships being experienced by people in almost all countries. After the recession in the early 2000’s people thought that money worries would get better, but they have become worse with most young adults living in debt. Statistics show that the global population aged 20-35 will never be able to afford their own homes and will continue to live in debt for the majority of their lives.
One method of living a normal daily life is through the use of loans. Unfortunately, when a person presents with poor credit, it can be difficult to gain a bank loan. In these situations, hard money loans are the best alternative. This article will provide information on the different pros and cons to using Singapore money lenders such as moneylenders-sg.com.
What Is A Hard Money Loan?
The basic premise for a loan is one where the individual needing money (that’s you) contacts a lender requesting a specific amount. If a loan is provided, an agreement will be put in place for the individual to repay the loan over a set time. Typically, lenders will consider credit scores before approving or rejecting a loan. This is to determine if you have a solid financial history and will be able to make the repayments.
Receiving confirmation of a loan from a traditional lender can be a slow procedure, even if you have a good credit score. In fact, you may have all the paperwork with a good credit score and still be rejected. The approval of an application is based purely on the lender’s opinion. Hard money lenders opt for a different approach.
A hard money loan from Singapore money lenders is based on collateral instead of a contractual repayment scheme. Using collateral to secure the loan, the lender is less concerned with a person’s ability or inability to make repayments. If for some reason you are unable to make a repayment, the hard money lender will receive their payment by selling the collateral.
What Are The Benefits Of A Hard Money Loan?
A great benefit to using a hard money loan from Singapore money lenders is the speed of loan approval. As the lender is more focused on the value of collateral, the loan can be obtained more quickly than a traditional loan alternative. Unlike traditional lenders, such as banks, this third-party money lender will not spend too much time reviewing income or credit scores. All you need to do is provide the correct type of collateral and the process of loan approval can begin.
2. Increased Flexibility
Needless to say, hard money loan agreements are far more flexible than the traditional loan agreement. Money lenders do not utilize standard underwriting processes; therefore, they are able to deal with each case independently. This is beneficial because the lender will focus on your specific situation and will be able to draft an agreement suited to your needs. A traditional bank loan is highly stringent operating according to procedures and regulations.
What Are The Drawbacks Of A Hard Money Loan?
1. The Cost
While the use of a hard money loan can seem better than a traditional one, not everything is perfect. Despite money lenders offering loans to people with bad credit, the loans can be very expensive. Unlike traditional bank loans, hard money loans provide double-digit interest rates and the need to pay set-up fees.
2. Not A Good Long-Term Option
If you are searching for a long-term loan, then it is best to opt for a bank loan instead of a hard money alternative. Hard money loans from Singapore money lenders are suitable for short-term situations only. This is because they use collateral as a measure for repayment and the value of the item can deteriorate over time. While it is possible to use hard money loans to purchase property or vehicles, it is recommended that the loan be repaid within the year.
No person wishes to find themselves in debt and finding a loan can be complicated. Using this information, you will discover if using a money lender is suitable for your needs.