Securing a private loan with credit challenges

 Most everyone has heard the old saying that “business and family do not mix” and I can understand why. More families and friendships have been fractured by money than any other single thing in the history of the world except perhaps jealousy. Whatever the case, the two are not easily mixed, but it is not impossible. Millions of small and large businesses around the world are built on the foundation that is family and friendships. It can be done. On a smaller scale, individuals with bad credit are often ostracized by banks and lending institutions with good reason. They can’t afford the risk.

That said, what is a person with bad credit to do? How do they get back on track and right this problem? First, they go out and start working on fixing their credit. Another way to get by in the meantime is to get a private loan from someone. These types of loans are much more difficult, but if done correctly they can be beneficial for both sides.

First, you must find someone willing to lend you money. The first thing they will ask is why you are not going to the bank. In this situation, it is vitally important to tell the truth. If you try to lie, you will be as obvious as a turkey in a pig pen. Tell the truth and explain that this is why you need them.

Have some collateral ready to offer. Sometimes, putting a vehicle or other piece of property can be plenty enough to sway someone into helping you out. Be professional about it and offer up something to show your good faith. Sometimes they will accept it and sometimes they will refuse the offer. Whatever the case, you need to be willing to offer it.

If the loan is for a small business or other type of venture, you should be prepared to show how this business will pay them back. A basic business plan is a great idea as this is what a bank would want to see. Lay out a clear way to pay them back and then show them what your backup plan is. If you have no backup plan, get one. You need that to ensure the loan.

If you are getting the private loan to simply buy something like a car, or other bills, then have a clear plan on how you will pay it back. Lay it out in writing and stick to it. People appreciate when you lay out a clear, concise plan to ensure their money. They did not get good credit and earn money by not paying attention to such things. They know how money works or they would not be in the position to loan it out.

Offer up interest to the individual making the loan. The minimum you can do here is to offer interest on a loan that they are doing essentially for your benefit. If you are willing to pay interest, it shows you have an understanding of their efforts in the situation.
Finally, when the time comes to start making your payments, make them on time and with gratitude. People that offer up private loans are doing so because they know that you are going through a tough time. Give them the benefit of at least paying it back on time. When you can’t, go straight to them and let them know ahead of time.