Hard Money Loans - Are They Really that ‘Hard’ Compared With the 1980’s?

[Corey Dutton]

Hard Money Lenders aren’t the “loan sharks” that the general public would like to assume from the use of the words, “hard money.” The term “hard money” brings to mind the idea of mobsters breaking the kneecaps of delinquent borrowers. The lender profile for a non-bank source of financing, is not one of a mobster nor is it the twenty something banker at Chase. A private money or hard money lender could be just about anyone, a businessman, a retiree, or an organized group that runs like a private bank.

For those who experienced the interest rates of hard money during the 1980’s in the U.S., the hard money interest rates of today are low in comparison. During the 1980’s it was typical to see over 20% per year charged on a hard money loan. Most hard money lenders these days charge an average interest rate of 13% which is obviously a lot lower!

To the consumers out there, look out for the “loan-to-own” predatory lenders. This type of hard money lender aims to structure the loan in a way that borrowers would induce them to default and thus allow the lender to foreclose on the property being used as collateral.