5 Myths About Hard Money Lenders & Consumer Loans

There are a lot of misconceptions out there about hard money lenders. While we always recommend giving us a call to learn more about your eligibility for different loans, we wanted to address some consumer loan myths to help give you a better idea of your options.

If you’re ready to further explore consumer loans, give us a call at 813-639-8804. Or use our easy online application process to get started today.

1. Hard Money Lenders Won’t Make Consumer Loans

A consumer loan is a loan provided to an individual. There are a variety of different types of consumer loans. For example, a credit card is a type of consumer loan. So are mortgages, home equity loans, auto loans, debt consolidation loans, etc.

Recently, an article in the American Association of Private Lenders’ (AAPL) magazine stated that most hard money lenders won’t make consumer loans.

As a hard money lender that has been helping Florida residents for over 20 years, we know this claim to be false.

At Associates Home Loan, we offer secured, hard money consumer loans. Whether you’re looking for a mortgage or a home equity loan, we offer a variety of consumer loan options for individuals, including those who suffer from poor or bad credit.

As part of the terms on our hard money consumer loans, a borrower must have collateral (typically real estate) to secure the loan. We work quickly to help consumers understand whether they’re eligible for a loan, how much they can borrow, and what terms they will need to adhere to. This transparency has helped make us one of Florida’s most trusted lenders!

2. You Need to Have Great Credit to Get a Consumer Loan

If you want a credit card with heaps of rewards like airline miles or money back, then you’ll probably need excellent credit. However, not all consumer loans require a 720+ credit score.

As we just stated, there are, in fact, hard money consumer loans that help individuals who need money more quickly or individuals who may have a bad mark on their credit. While the terms and rates will differ from, say, a traditional bank mortgage, it can be a crucial tool for individuals looking to get ahead and purchase a property after a bankruptcy, identity theft, or other poor credit situations.

3. Hard Money Loans Are Only for the Desperate

There’s this notion that hard money loans are only for individuals who are about to lose their homes and need cash at whatever cost.

While there are certainly some cases where people use hard money loans as a loan of last resort, there are actually a variety of reasons consumers and businesses turn to hard money loans.

For one, the process of obtaining a hard money loan can be quicker than a traditional bank loan. This makes this type of loan attractive for those who flip houses for a living or who deal in real estate more broadly. It can also be helpful for refinancing a home.

For individuals who just need a short-term bridge loan while they sell one house and move into another, for example, a hard money loan can be a great solution. Hard money loans can work as a stop-gap measure for maintaining cash flow until a home is sold.

4. Hard Money Loan Terms Take Advantage of Borrowers

Another misconception is that hard money loan terms are predatory. While many hard money loans have higher interest rates than traditional bank loans, the terms themselves are clearly spelled out for consumers.

We believe clear terms are crucial for creating a lasting relationship with borrowers.

If you ever feel that you don’t understand the terms on a loan you are considering taking out, make sure to talk it over with your lending professional. At Associates Home Loan, we’ll make sure you understand your borrower terms.

5. Hard Money Loans Are Riskier than Traditional Loans

Taking out a loan is like making a promise. You’re saying you’ll repay a loan within a certain time frame, making monthly payments of a certain amount.

Is it risky to take out a hard money loan? As long as you can abide by the terms and you have the steady income to make your payments, there is no additional risk to taking out a hard money loan as opposed to taking out a traditional consumer loan.

In determining whether to allow someone to borrow, a lender will consider their risk factors. Hard money lenders take on a certain amount of risk, especially when it comes to providing bad credit loans. However, a lender can only be successful when they get paid back. If there is undue risk, they will not originate the loan. The idea that hard money loans are somehow riskier, therefore, doesn’t make sense. The main thing a borrower must consider is their ability to secure the loan with collateral and their ability to pay the loan back as required by their loan terms.

Will The Myths Ever Disappear?

Why do these myths persist? For one, many people just don’t know a lot about hard money lending. These ideas about the industry get spread and they tend to stick. Secondly, there’s a tendency to assume that because one hard money lender doesn’t do certain loans, that others won’t.

At Associates Home Loans, we’ve made it our mission to help as many borrowers as possible. We work with our clients to create solutions that fit the situation so they can buy a home, invest in property, consolidate debt, and more. We know that borrowing can be confusing and frustrating. We’ve taken pains to simplify the process so that our clients can focus on what matters and use their loan funds to better their lives.

Don’t fall for a consumer loan myth! If you’re in the market for a consumer loan and aren’t sure whether you qualify, contact Associates Home Loan. We’ll help you navigate the process so you can get the answers you need, fast.