Lifestyle / September 2021
There are a number of myths out there around private money lenders, who exist to offer an alternative to the powerful banks and credit unions who hold such a tight grip on the financial livelihoods and future of everyday people. These myths often stem from the bad publicity of loan sharks or short-term profit makers who disguise themselves as private lenders.
Depending on the situation, and what a borrower is looking for, private lenders can offer loan agreements that are far more equitable than what any bank could offer. Below are three common myths about private lenders, and the truth behind them.
Many people approach private lenders because they are unable to get their loan applications approved by traditional lenders like banks and credit unions. This is because private lenders offer unconventional financing options that loan applicants are unable to find elsewhere. Among these are flexible financing options tailored specifically for loan applicants with poor credit scores.
This is especially true for community-oriented lenders who offer to sit down and listen to applicants with poor credits scores, as opposed to banks and institutions who are intolerant of borrowers that fail to conform to their strict and inflexible criteria. Besides a poor credit score, borrowers may have a hard time getting approved by banks because their finances do not satisfy these criteria. Community-oriented and open-minded private lenders present a better financing option for lower income applicants, as they are experienced in tailoring more sustainable loans.
Well established private lenders wouldn't be still around if they were only plotting debt traps or employing dishonest tactics. Private lenders are dependent on having a good reputation and rely heavily on referrals and word of mouth. The margin for failure is thinner for private lenders, as compared to massive banks with billions of dollars to draw from.
Unlike high paid bank executives, the owners and administrators of private lenders tend to be invested in the business and their livelihoods are tied to the success of their company, which in turn is tied to the success of its loan applicants. Loan sharks are easy to avoid if applicants stick to lenders with good reviews, and those who have been involved in charities or who have existed for a long time.
Private lenders are actually less likely to agree to risky loans because they are invested in their business and have more to lose than banks. They typically lend their own money as part of the business, and with so much at stake, private lenders cannot afford a failure that they couldn’t recover from.
This fact makes well established private lenders more attractive because their longevity indicates an adept ability to devise sustainable loans that applicants can successfully pay off.
MoneyShop is an established and recognised lender in Auckland that has helped thousands of Kiwis with fast easy loans since 1993. We offer a variety of personal loans including car, debt consolidation, wedding, and unsecured loans. We are open minded and will consider applicants with poor credit scores, so have a look at our conditions and visit our website to discuss what you are after with our customer service reps by clicking here.