How Does a Hard Money Loan (Like Online Payday Loans for Bad Credit Work?)

Hard money loans are a big part of the loan industry right now. Since people have lower credit scores than in the past, it can be difficult for many individuals to get the personal loans and other traditional loans that they may have been able to.

So, how do hard money loans even work? What is involved in getting your hands on one and how can you be sure that you are finding one that actually meets the needs and concerns you’re dealing with? In this blog, we’re going to explore the topic of hard money loans, how you qualify for one, and what is involved in the process of paying one back.

How to Qualify for a Hard Money Loan

There are a number of different ways that you can qualify for a hard money loan, and they all depend on where you are getting it from. Most lenders will look at your property and get it appraised so that they can know how much the true value of the property is. Then, they will take that amount and give you about 65% or 70% of it as the loan.

Obviously, this works differently when you’re considering an online payday loans for bad credit. When you look at payday loans online at, you’re going to get your loan offer based on how much you expect to get paid on payday, and then offer you a percentage of that (depending on the company you work with).

Most of the time, your credit score is not involved – which is why hard money loans are a lot easier for individuals to get their hands on.

Why So Many Different Numbers?

There are a few reasons for this, some of which benefit you, others which benefit your lender. It benefits you because you will get the majority of the money you need based on how much your collateral is worth, while still being able to use your collateral as needed. It benefits your lender because it keeps them safe in case you run off and don’t pay.

That’s always the risk with private loans like these; the person that you are lending the money to may run off and not pay you the money. So, if there’s collateral involved, the consumer is much less likely to do that. They’re essentially trying to reduce their risk as much as possible while still trying to get a profit.

What About Interest Rates?

Interest rates on hard money loans are typically higher than other types of loans out there. As we will discuss shortly, these loans are meant to be paid back ASAP, and the higher interest rates are meant to help keep you on track for that.

You always want to check the interest rates before you agree to a hard money loan. Know when the interest is accrued (daily, weekly, monthly), when the interest will start being accrued (dates), and how much the interest rate is.

How Long Do I Have to Pay It Back?

Hard money loans will have variable options regarding the payback period. In the case of payday loans, you typically have until your next paycheck to get everything back to them. Since their intent is, typically, to get you through before payday comes, you’re likely going to pay it back with that check, anyway.

With other hard money loans, you will put together a payment plan based on your needs and how much of a loan you’re taking out in the first place. In a lot of cases, you’ll end up with a month or two to get everything paid off. Hard money loans are designed to be used and paid back quickly, so you need to be ready to take care of that before you sign the dotted line.

Considering Your Hard Money Loan Options

So, as you can see, a hard money loan is definitely a unique way to deal with potential loan. You want to make sure that, whatever you are doing, that it makes sense as to how you want to work ahead of everything and that you aren’t going to put yourself or your property at risk.

Take some time to learn about how these sorts of things work and see exactly what it may matter for you and whatever you’re trying to accomplish. Talk to a professional to see what they have to say about this whole thing and you will, soon, discover that it can work out quite well for you when all is said and done.