When shopping for hard money loans online, there are certain things to look for and certain things to avoid. As with any internet transaction, when personal information is requested, the consumer needs to use caution.
The FTC says that con artists have “gone high-tech”. There are numerous reports from people who have been taken in. In many cases, alternatives to conventional financing are the best way to go. You just need to choose your lender carefully. Here, we hope to give you the information that you need to find a legitimate company to deal with.
Many of the companies that advertise hard money personal loans online are payday lenders. While the payday loan is not a true scam, the fees that the companies charge are equivalent to yearly interest rates in the double digits. This type of loan is not the right choice for anyone who has an option, but is definitely wrong for the real estate investor. If you are new to investing, looking to buy, build or flip a property, you should be looking for lenders that advertise rehab funding, construction loans or something similar.
Brokers are another group that advertises hard money loans online. If you use a broker, you are paying him or her to go out and find financing for you. They may or may not be able to provide this service. Avoid the ones that ask for large up-front fees, anything more than a few hundred as an application fee. There have been reports of consumers that paid thousands of dollars to brokers that “guaranteed” financing. Not only was there no loan, they lost the money that they paid to the broker.
Legitimate companies offering hard money personal loans online rarely list their services with a broker. They can do their own advertising. They may have associates that refer clients to them, but the consumer does not pay a fee for the referral.
It is much safer to use a lender that has you send your information to them by regular registered mail, rather than e-mail. They might request a copy of your credit report, but they would not need your credit card numbers. You might feel like regular mail is slower, but it is safer. You could always send the application overnight. You can get pre-approval while you are still looking for the right property, so there is no real need to rush. Not all companies offering hard money loans online have a pre-approval program, so look for one that does.
Currently the FTC lists no complaints with hard money lenders, though there are many with payday lenders, but if you have a concern about a specific company, you can check Federal Trade Commission’s website (www.ftc.gov) and run a search for the company name. If nothing comes up, then no complaints have been filed with that company.
You can definitely find hard money personal loans online, you just have to know where to look.