Once, when no non-bank companies operated, the cheapest form of borrowing money was loans from family or friends. Virtually little with the family, when any contracts were signed, the entire lending process was carried out in words.
Nowadays, private loans are gaining popularity and in theory do not differ from the previous ones. Currently, potential borrowers from the immediate environment are being replaced by virtual investors. Private loans are most often given by people who have savings and want money to earn on themselves. Private loans under a promissory note or pledge are certain money, provided that the borrower is not bankrupt.
These types of loans are an additional injection of cash for those who need more money, e.g. for buying a car or for a sudden refurbishment of an apartment or for paying off their previous debts.
What are private loans?
A bank’s rejection of a loan application is not the end of your dream of a loan. Today, we can take a private hand loan or a loan from private investors for a promissory note. These types of loans are granted by private investors or private companies. The offers are addressed to people in debt, with a bailiff, entered into databases with negative credit, having low income and finally to working in black or living on benefits.
According to the law in force in our country, anyone who grants private loans for amounts greater than USD 500 is required to sign a contract. The contract usually includes such items as:
- What if there is no repayment;
- What interest is calculated for each day of delay;
- Costs, additional fees.
Such a contract protects the interests of both the borrower and the lender. The contract between the investor and the borrower should be structured so that both parties are satisfied. In addition, all loan formalities are kept to a minimum. Most often to provide basic data and sign the contract suggested by the investor.
How do private loans work?
In the country, private loans, contracts signed between the parties and the costs they agree on are not controlled. Many people are probably aware of the fact that instant loans are not the cheapest. Private investors are aware that they are often the last resort for those in debt. Among other things, private investors usually offer loans under a promissory note or pledge. There may also be other forms of collateral, securities or a plot.
It is also worth knowing that in the case of private loans, there is no reason that an investor will transfer money to your account after signing only the contract. Private loan for an amount of up to 10-20 thousand. most often it will be secured by car or bill of exchange. And at higher amounts by mortgage. A few days of slippage and you lose your fortune. And in the case of a bill of exchange, a bailiff can knock on the door quickly.