Are Private Lenders Legitimate?
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If you’re looking for a private loan, you might be wondering if private lenders are a legitimate option. Private lenders ate thoroughly regulated through the Australian Securities and Investments Commission, meaning that licenced private lenders and brokers have to adhere to strict rules and guidelines. These regulations ensure that private lending is a legitimate form of lending, and makes it safe for borrowers to use private lenders.
Read on below to find out more about private lending and the safety guidelines in place in Australia.
What is private funding?
Private funding refers to the funding given to either a company or an individual that have access to private funds. This way differs from traditional bank lending in that there are often non-traditional qualifying guidelines. Individuals may turn to private lending when they are finding it difficult to receive finance from a bank due to bad credit history, or even just simply being a property investor that has leverage.
Private lenders can be either an organisation or a private individual. Unlike traditional funding sources, like banks, private lenders don’t have traditional qualifying systems, meaning that getting access to a loan is much easier.
Private loans can be used for many things, such as buying or building a house, purchasing a business, refinancing or urgent funding. Short and long term financing are also viable options when it comes to private loans.
Are private lenders legitimate?
When you apply for a loan with a private lender, you are getting a legitimate loan. Private lenders have the same security as traditional lenders, as there are strict rules that they need to follow. Generally, private lenders have a more streamlined application process compared to banks. Private lenders often allow borrowers to apply with fewer documents, as their lending criteria can be less strict.
How are private loans regulated?
Generally, it’s a common assumption that traditional lenders are a safer option when it comes to getting a loan. However, private lenders in Australia are subject to complying with strict legal and industry codes. Financial lenders and financial brokers must be licensed by the Australian Securities and Investments Commission (ASIC).
ASIC licenses and regulates banks, credit unions and brokers to ensure they do not lend credit that cannot be paid back. ASIC can also take action against lenders who deliberately mislead and are deceptive towards their borrowers.
According to ASIC, credit providers legally must make reasonable inquiries about your financial situation, requirements and objectives before lending, and also take reasonable steps to verify your financial situation. It is through these strict terms that private lending is thoroughly regulated.
Benefits of a private loan
There are many benefits of private loans and lenders:
- Quicker settlement – If you happen to require a loan quickly, the approval process for private lending is faster, and usually involves less paperwork than those of a bank.
- Specialised loans – Private lenders are often able to cater to those after a wide range of loans while having far less strict rules than traditional funding. This may be ideal for those seeking short term finance.
- Credit history – Having a good credit history may not be necessary to gain approval from a private lender. Many people seeking finance are rejected by banks for having a less than ideal credit history.
- Easy approval: Non-bank lenders specialise in offering loans to borrowers in individual circumstances. If you do have a bad credit history, or if you cannot prove your income via the traditional methods that are needed by banks, private members may be able to offer you an easy solution.
- Fewer requirements – Banks will generally want excellent credit, a good repayment history, income requirements, and proof of income when approving your loan. Private lenders often have fewer requirements, making the whole process much easier.
- Flexible payment terms – Private lenders may be able to offer you more flexible loan terms compared to a bank.
- Competitive rates – Private lenders generally have access to a wide range of lenders, and may be able to offer you competitive rates.
Is a private loan possible with bad credit?
One of the main benefits of a private loan is that your credit rating may not matter as much to a private lender as it would to a bank. If you have a bad credit score, it does not mean that you can’t apply for a private loan. Some private lenders specialise in lending to those with bad credit scores, and also generally make the process easy. If you have bad credit, you may find that private lending is a better option than traditional forms of lending, as private lenders may have less strict lending criteria.
There are many benefits to choosing a loan through a private lender. Generally, private lenders may be able to provide much more competitive rates than lenders such as banks can. So, if your credit rating isn’t the best, a private lender might be able to give you a better loan than a bank traditionally could.
Where does Tiger Finance come in?
With Tiger Finance, we can help to get you a loan quickly and easily. You will have a free consultation with one of our specialists, and we will tailor-make you a loan. We will negotiate with lenders on your behalf before you are approved.
We have helped countless Australians with both good and bad credit ratings get approved for private funding. We understand that lending criteria from other lenders are too strict, and can stop you from achieving your goals. That is wrong, and it should not hold you back.
How we can help
Our finance specialists can help you find the right loan for your project. If you are one of the many Australians finding getting a business loan difficult, Tiger Finance can make the process simple and pain-free.
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