Private loans

When borrowing from a stranger , the borrower must be careful and diligent with the money lender, as such private credit can also be an attempt at fraud. Such a cash loan is risky not only for the borrower but also for the lender, especially since the parties to the transaction are not known to each other. If the lender lends a large sum of money, there is always a risk that the money will not be returned.

Set very high loan rates

Set very high loan rates

That’s why private lenders always look very carefully at potential borrowers. There is also a need for a formal agreement between the two parties involved in the money transaction to secure both the borrower and the lender. If a cash loan is taken from a completely foreign person, then the borrower must expect that the lender will definitely set very high loan rates – they can be as high as 1% – 3% per day.

Such a cash loan is certainly not beneficial to the borrower, but it must be understood that by setting high interest rates the lender is trying to hedge against potential losses. Private lenders always try to lend as little money as possible to the potential borrower. This is also a loss insurance. However, very large sums of money can also be obtained from private lenders. In addition, a pledge is not always required.

Loan amount is large and require collateral


But there may also be private loans, especially if the loan amount is large and require collateral. If the lender has such a condition for taking out a loan, then it should definitely be included in the loan agreement as well. Any claim or condition that is not subsequently included in the contract, but is merely spoken of, may be violated without any penalty. Therefore, when making such a private loan agreement, you should always make sure that the contract does not contain anything unforeseen or different from what you have talked to the lender.

Credit obligation entails is the potential for damage to the relationship

Credit obligation entails is the potential for damage to the relationship

The other way to get a private loan is to borrow from good friends , relatives or colleagues, as long as they are able to lend the money you need at all. In this case, there is a high probability that you will not have to pay interest on the loan either. However, the greatest risk that such a credit obligation entails is the potential for damage to the relationship if, for example, the borrower delays repayment.

When lending money to someone you know or a creature, trusting the lender and honest, responsible behavior on the part of the borrower is key. If the money is already lent without the need to repay more then it is important that the loan is repaid in time, otherwise the relationship with the person who trusted and lent the money could definitely be damaged.

Failure to provide private credit on time can lead to a breakdown in good friendship or distrust between relatives. If a borrower delays money once, then there is a good chance that he or she will no longer be able to get a money loan because the first time a borrower has delayed repayment, the borrower will already have proven that he is not trustworthy.