A private loan is the lending of money by a private investor at interest, with the aim of making a profit in the form of this interest. As with any bank loan, the main terms of the loan are: amount, loan term, and most importantly – interest. The refund mode is also necessarily discussed: in parts according to the schedule or in one amount at the end of the term.
Despite the fact that the loan is known as private, it is used, as a rule, for business purposes – such as increasing working capital, opening new outlets, closing the cash gap. There are times when you need to solve some personal goals – the purchase of real estate, expensive equipment, etc.
People use private loans just in those cases when, for some reason, it is impossible to take a bank loan. There is only one way out – to look for a private investor.
In fact, there are a lot of reasons not to apply for the bank credit, here are some of them:
It happens that there is a large amount of your own savings and only a small part is missing. In this case, going to a bank means collecting a lot of documents and waiting for a decision especially when money is needed here and now. For example, an interesting option for the purchase of real estate comes up, but there is simply no time to get a mortgage loan. Or a good deal comes up, but while you collect all the documents and wait for approval, it will simply end up. It is more profitable to take more expensive but fast loans.
When all bank loans have already been issued, the official solvency does not allow taking more, and financing, albeit in a small amount, is required.
As a consequence, for these reasons, private money is more expensive than bank money, which is the benefit for you as an investor.
Bank deposits and real estate can never provide such returns. At the same time, you should not exclude them, you just need to understand that if you want not only to keep up with inflation, but also to increase your capital, then you should consider other instruments.
It is clear that, in this case, there are more risks, but here is the question of the correct diversification of money: do not put all your savings in one cart. In investment matters, the experience plays a big role.
Tags: loans online, Micro loans, online loans