Private Money Loans

Private money loans have grown in popularity exponentially over the years and is technically a term used for describing loans that are given out to individuals or companies by a wealthy individual or a private organization. Such individuals and organizations are known as private money lenders. PB Financial Group is currently the most reliable and respected private money lender in California.

Private money loans are generally offered to borrowers with no standard guidelines for qualification required by the lending institution or the bank. The only problem with private money loans is that they can be risky sometimes for both the borrower and the lender. That’s because there is less regulation and the borrowers enjoy greater freedom for using the loan for any purpose they desire.

A lot of private money loans follow the current interest rates prevailing in the market but that can make the loan significantly expensive for you. When lenders know what you intend on using the loan for, they can charge you a higher rate of interest if they deem the risk to be high.

Regulation of Private Money Loans

All private lenders must follow the state and federal usury laws, as they are subjected to banking regulations. However, routine regulations may still not apply to them or their loans. A frustrating regulation that most private lenders deal with is that they are subjected to limits on how many loans they can hand out if they don’t have a banking license.

A lot of private lenders don’t require any license since they’re not a bank or any type of lending institution. There’s also a limit set on the number of loans a lender can offer before they are mandated to acquire a banking license in some states.

Risks Involved with Private Money Loans

There are always risks involved when you’re borrowing a loan, and private money loans come with their own bag of risks for the borrower and the lender.

Borrowers

The major risk that borrowers face is failing to properly check the private money lender because it’s important you know where the money is coming from. Generally, it’s from a few independent lenders who are looking for a return, and it’s important to ensure that the money is good so that the loan doesn’t fall apart suddenly.

You don’t want to find yourself in the position of moving on an opportunity and then finding out that your loan has fallen apart. You need to read the loan agreement in full to properly understand the specifics or else you may find yourself stuck in a loan that you can’t payback.

There are risks for private money lenders as well that involve conducting due diligence on borrowers so that they are certain the borrower has the financial capability to pay back the loan. If the borrower takes the loan and uses it for a risky investment or if they waste all that money, the borrower is going to default on the loan; this is something that a private money lender can’t afford in most cases.

Want to learn more about private money loans in California? Get in touch with PB Financial Group today!