Private Loans

Feeling the need to borrow money happens to most of it. But we need to be sure it is a wise move. Some loans can lead to a great deal of sorrow, regret, changes and problems.

When we borrow money from a Bank or a company that sells loans we know exactly what the terms are and we are able to make an advised decision as to whether or not to accept those terms. For example, we borrow $10,000 and pay back $400 a month for 3 years. The terms may not be totally fair, the loan may be small in comparison to the total amount we are expected to pay back, but we do know all the facts and it is up to us whether we say yes or no and sign on the dotted line.

With a private loan we are not dealing with a Bank or loan company. We have maybe tried to borrow money from them and been refused. This means we have to forget the idea altogether or borrow from someone else. This leaves either a loan shark, whose business is to lend money to those who want or need to borrow but cannot get loans from Banks and normal loan companies, or from someone close to us such as an employer, friend or family.

When we take on a private loan the terms can be quite outrageous, because a loan shark will know that if you need the money you have to literally pay anything he asks. He knows you cannot borrow from a Bank so have to pay back more interest to him. Loan sharks might lend money when the whole situation seems more iffy but they expect more money in return. A loan shark will probably ask for a huge rate of interest. There may be nothing in writing. And they can change the terms whenever they wish. If they see you are struggling they might suddenly increase the loan because it is advantageous to them.

With a family member or friend they may lend you the money in all good faith. But because they are not a Bank or a loan company they do not have millions in the Bank themselves and they may well need to be sure you will pay them back. It is possible they need the money they lend you quite quickly because of the bills they will be needing to pay. This means they may not be able to lend you such a large sum or will need a repayment quicker. Although they may charge less in interest, or no interest at all, because they are not lending you money to make a profit but to help you. However if they suddenly get a huge bill crop up that they had not allowed for they may rush to you and demand you pay them back far sooner than was originally agreed. If you borrow from an employer and you default on the payments you may end up falling out with him and losing your job.

So, private loans have their good and bad points, depending on how much you borrow, what your earnings are, and who you borrow from.