Not to stereotype or anything like that but when I think of hard money personal loans, I think of the old fashioned loan shark that we all got to know in those movies made in the 50’s. As far as these types of loans go, in their true sense, they are very hard to come by. There are not any financial institutions or banks that will make a personal loan to anyone with bad credit or is in a financial crisis. That is going on my definition of a personal loan, which would be a loan on your signature and promise to pay only. These signature and promise to pay loans are available on a business level, and they are called bridge loans, mostly to fund a project and the lender is betting that the project pays off. For a hard money personal loan, be prepared to put up some type of collateral.
The hard money lenders are usually private parties and they want as much assurance that the loan will be paid as they can get. It is very common to fund a hard money loan with real estate for the collateral. Although, there are certain instances when you could put anything you own that is of value up for collateral on hard money loan. This will all be up to the lender and just how creative he feels like being on this particular situation.
When you are looking for hard money personal loans, you should be aware that whatever you’re collateral is, you will only be able to borrow about 50% to 60% of its current value. This is because the lender wants to be sure if you default on the loan, he will be able to get his money back out of his investment. The tougher your situation is, the less the loan to value ratio is likely to be.
Just as your particular situation will play a large part in what your loan to value ratio is, the interest rate will also reflect the amount of risk that the lender feels he is taking on with your loan. The interest rates will usually fall in the higher than normal range. This will be somewhere from 11% to 18% depending on the risk and other factors of your loan. There is a place for hard money personal loans and at times they can be of great help.