What Factors Affect Hard Money Loan Rates

Factors in Hard Money Loan Lending Rates


Any non-bank loan can be called, a private money loan. Hard money loans fall into this category of non-bank financing and are given their namesake because they are loans against “hard” assets. For borrowers that are used to qualifying for bank loan, the interest rates charged by non-bank lenders may be shocking.

For example, hard money interest rates can range from 7% to 14%, or even higher. Hard money loan interest rates are not ruled by the same factors that affect bank rates. I will mention just a few reasons here, but there can be additional factors that are taken into account other than this short list:

  1. Rapid Fundings: Hard money lenders can move faster towards a loan closing than banks. Because of the short closing timeframe, a higher risk factor is associated with hard money loans, which will increase the interest rate charged.
  2.  No Credit Checks: Because most hard money lenders don’t perform credit checks on borrowers, this is another reason rates are higher. This ties in with number one above.
  3.  Condition of Property: Hard money loans are perfect for vacant properties, or properties in need of repairs. Because the needed work may or may not get done after a loan closes, this adds a higher level of risk, thus a higher interest rate.


Why Hard Money Loans Work

When a person that is used to qualifying for a traditional bank loan looks at hard money lender rates they can seem overwhelming, but used in the correct situation they can be the make it or break it solution to many business or personal challenges.

So if conventional financing is not an option and you have a asset based loan you would like a quote on, please give us a call at 707-315-1119 or fill in our borrower form or contact form and one of hard money or private money lending professionals will be in touch promptly.




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