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Choosing Hard Money Over a Traditional Loan

Written By Devi Kristanti on Sunday, October 5, 2014 | 6:20 AM

Lending and borrowing loan is a tricky business, but it does not require an IQ of Einstein to understand it. Investors and consumers borrow loans for investments, purchasing and to improve their lives. It has a fixed tenure and there is a limit of loan that can be borrowed, which actually determines that interest on this loan, and there are some policies in case of being defaulted.

Hard and Soft Loans

There are two kinds of loan that are hard and soft. When money is lend as per policies of banks and has protection laws for defaulters then these loans are termed as soft loans. While hard loans are usually lend by a hard money lender, and they are not strictly bounded by bank's policies because they have their own policies, which are monitored by the state.

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But with all the down sides of hard loans there are some benefits. One of the most interesting features of hard loan is that, it requires no such security proves, and its security procedures are very simple.


Hard money lending has less strict security procedures unlike private and state owned banks. It usually requires filling a form, and the hard money is issued against property, investment, business property and even a business itself. The hard money is used to show that the money borrowed does not follow the policies of banks and it has a fixed tenure; and after the completion of tenure, the borrower will be charged with a higher interest rate. This law actually varies with states and it is always good to review the policy before acquiring the loan.

Beside security procedures, hard money lending has much faster processing of the application, and money is issued to the client quicker than the bank. Bank takes around a month to process, verify documents, and then issues the money. Some companies, investors and even individuals prefer hard money for quick purchasing, and it is very useful for repairs and upgrades.

It is also interesting to know that hard money lenders are also easier to find. You can contact real estate and mortgage companies because they keep them in close contact. You will find a better deal if have good relations in the market. You can also search in directories and you will find plenty of hard loan lenders.

Advantages over Traditional Loans

There are both, advantages and disadvantages of hard money loans. It is good to prefer a hard loan when you need quick purchasing. You also receive loan quicker, as it requires no income proof. You can also acquire a larger amount of loan as compare to a bank. It is suitable for people who have incomplete documents, have a bad credit score and need to improve it, and for people who need money for a short term.

Banks have monthly installment procedures in order to repay the loan while you can negotiate and repay the loan before the end of the tenure. Hard loan lender is good but it important that you seek advice of an expert before you acquire the loan.

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