Looking for a Hard Money Lender? Here’s How to Choose One

The pandemic has been tough on many people and it’s good that some parts of the world are slowly recovering. If you’ve been struck by the effects of it, chances are, you might be facing a few financial problems currently. People have been making a lot of loans currently and some of them have been making poor choices.

Due to desperation, some people get loans from unsecured firms or entities. This results in them either getting scammed or getting stuck in poor loan terms.

Finding a good lender is a must, especially for seriously heavy loans such as hard money loans. It’s imperative that you know how to discern a good lender from a bad one, lest you want to get into deeper problems in the future. Before we talk about how you can find a good lender, let’s first talk about exactly what a hard money loan is.

What Is a Hard Money Loan?

A hard money loan is a financial instrument that is secured by real property. These are large loans that people make usually as a last resort. These are primarily used for inexpensive transactions such as real estate and auto buying. The lender is usually a group of individuals or it could be a company as well.

Hard money lenders are very easy to find, but of course, some lenders are better to deal with. With that out of the way, let’s now talk about how you can find the right hard money lenders.

Look for Reputable Lenders

It should be obvious by now but you should only loan from reputable lenders. According to financial assistants from, finding the legitimacy of a lender is as easy as doing research online. There are many ways through which you can check the reputation of a company.

The first thing you should do is look for a list of the best hard money lenders in your area. There should be blogs and forums that will direct you to a good list of hard money lenders in doing this. What’s great is that you’ll be treated to a list of pros and cons of these lenders as well.

Ideally, you’d want to find lenders that have been around for a long time already. Some of them will carry accreditation that proves their legitimacy. As for the reviews, never base your decision on a few reviews on one platform alone. Check out other websites so that you can get a full understanding of a company’s reputation.

Read Through Their Terms

The first thing you need to know about hard money lenders is that they have higher interest rates as compared to banks. However, they are more lenient when it comes to requirements as well. They can also process loans faster than banks, meaning it’s very easy to get cash in emergencies.

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Although their interest rates are high, some hard money lenders are going to have ones that are lower. Try to read through their terms and look for lenders that have interest rates that don’t exceed 10%. As for the payment terms, look for lenders that offer payment terms that can last up to 36 months as this is usually the maximum.

Keep in mind that you aren’t just looking for trustworthy lenders, you are also looking for lenders that give you the best deal possible. Some lenders are going to promise you quick processing but once reading the contract, you’ll see that you’ll be getting into very poor loan terms with them.

Get Referral from Friends

If one of your relatives, friends, or colleagues has made a hard money loan before, then it might be best to get a referral from them instead. Since they’ve already loaned before, they can immediately tell you the pros and cons of the particular company or bank that they’ve transacted with.

Referrals are good as there’s already a firsthand account of the legitimacy of the lender. Just make sure that you ask your friend all of the questions you want to ask so that they can clear anything you want to know about the lender. As a general rule of thumb, try to ask for their contract so that you can at least see what you are getting into.

Making a hard money loan is a big responsibility. It is only imperative that you be very discerning about the company or individuals you transact with. Making a poor choice could not only lead you to get more losses, but it can also get you in serious legal problems as well.

Written by Eric

37-year-old who enjoys ferret racing, binge-watching boxed sets and praying. He is exciting and entertaining, but can also be very boring and a bit grumpy.