5 Ways to Get a Personal Loan from a Private Money Lender06 April, 2017
The unorganized money lending sector today, even after the kind of banking penetration we have managed and even when a plethora of lending products are made available to pick from, still does a significant amount of business. It is as much an option as there is a chance for anyone of us to experience a funds crisis. And of the many reasons that still make it viable to borrow from the private money lender, the fact that the creditworthy criteria are a flexible one, is perhaps the most important one. Unlike a standard bank loan application process in which the potential borrower is assessed from the capability to pay back—when the income is low, or when there is a current loan liability running, or simply when there is no prior track record of a loan being paid back, unorganized money lending is purely subjective. If the money lender decides to lend, the borrowers get the money, simple! This and the quick processing that has now become typical of the unorganized sector are key reasons for people to turn to a private money lender to tide over a low resource period. But how do you go about getting that loan from a private money lender? 1. Identifying a professional money lender versus a loan shark: while all money lenders can create trouble on non-payment, only some make it their standard operating practice and they are the ones to keep away from. Ask around with friends, the ones who have some experience. Usually, that money lender is the one you should borrow money from. Steer clear of loan sharks. 2. Understand the Interest rates: Private money lenders set their own rules because they exist outside the scope of the regulated market. Fluctuating rates, unreal rates, rates not written down on paper, are all signs that you can expect trouble any time. 3. Collateral versus non-collateral loans: The unorganized sector often lends against a collateral. Many keep their gold, valuables etc., against which a loan is extended. If you do not want a collateral based borrowing, you might want to go only to the money lenders who offer personal loans. 4. Proving Credit Worthiness: Money lenders do check for domicile status, are of the potential borrower, salary slips and do ask for paperwork. To establish that you can pay back regularly you might have to show a regular income month after the moment. You slips can come in handy. 5. Look for online channels: Online borrowing is increasing and is still in the unorganized area. As in, they do not come under the strict regulations of the apex bank. Peer to peer lending, allows you to borrow, personal loans online, from pooled in funds of online lenders without a broker in between—without a bank, or a financial authority in between facilitating the lending and borrowing deal. In fact, this doing away with a go between also contributes to greater margins. Borrow money online now, from a number of online peer to peer money lending platforms that even allow you to see their past performance well before you sign up. People who have used the platforms can often be reached and asked for their experience before making a decision. It is a personal loan, sans the standard qualifying criteria.