- August 4, 2021
- Posted by: admin
- Category: Blog
Obtaining a personal loan from the bank can be an easy process but if you just have all the necessary documents and you complete the essential eligibility criteria with a good credit score. Most people would need funds, so when a bank declines a personal loan then they approach private lenders in UAE. This is not that all rejected persons go to a private lender for getting a personal loan in the UAE but maximum rejected persons would be in urgent need of funds. Here we mentioned a few things that you need to know about private lenders to obtaining a loan.
What is Private Money Lending in UAE
Private money lending occurs when a separate person or small business lends its own private funds to another investor for the purpose of investment. In real estate, this is an alternative choice for financing an investment property outside of a lending institution or traditional bank. Difficult money lending, frequently utilized for rehab loans, is an instance of private money lending, however, separate real estate loans may be utilized for bridge loans, residential loans, development loans, and commercial loans.
The private lenders usually secure their investment utilizing a record and mortgage or different kind of security source, getting a return of investment, equity split, or potentially a combo of both in return.
As private money lending is personal, this is up to the borrower and the lender to set up the condition of the loans. As long as the property is occurring utilized for the purpose of investment, this happens outside of the Dodd-Frank and permits the investors to set the rate of interest or loan conditions that are accepted between the two parties. The rates of interest for these loans are usually many points of a percentage high than interest on a conventional mortgage.
Basic Requirements for Private Lender in UAE
A private lender in UAE lends money at any time without any eligibility criteria means the minimum salary, age limit, nationality, and more. Since there is no need for any kind of paperwork, the finance is getting approval without any time limit. A private lender does not consider the minimum salary.
2. Interest Rate
Taking benefit of the urgency of the borrower, a private lender charges a higher rate of interest on shorter periods. Any delay in payment causes the rates of interest to rise. Because of this, the repayment amount would be huge.
Private lending is illegal in the United Arab Emirates. The borrowers and the lenders are equally punishable for such an offense as the authorities say lenders are as long as there are borrowers. There were several cases where the borrowers were arrested for taking illegal loans. The authorities suggest that if there is no borrower then there will be no lenders.
Private lenders can take post-dated cheques, a passport from the borrowers at the approval time and do not return the passport until the repayment. They deposit the cheques in the bank and in case the cheque bounces then this can be a legal problem for the borrowers. They threaten the borrowers with delay in payment which is completely illegal. Some moneylenders confiscate property documents as collateral.
Business Loan from Private Lenders in UAE
Most of the owners of small-scale businesses lend funds from the private lenders in UAE to address some of the shortcomings of starting a business. But the burden begins when the payment is delayed or the period is passed.
If you do not have well knowledge of managing a business, then it is better not to get a personal loan for the purpose of business from private lenders. If there is a loss to the business then this is difficult to repay the loan borrowed from the private lenders in UAE. This is not suggestable if you can’t afford the rates of interest.
Options to Get a Personal Loan in UAE
Most of them have no knowledge that there are some options for obtaining a personal loan in a safe manner which is by offering certain collateral. You can pledge your home, car, bonds, and shares and receive money in return for them. Personal loans from private lenders are not a perfect choice. There are some banks offering personal loans at a low salary. Search about those banks and receive money in a legal manner for low rates of interest. You can even check with the banks that offer personal loan to people new to UAE that includes some benefits such as no salary transfer needed and more. This is better to avoid obtaining a personal loan from private lenders that charges higher rates of interest.
Also read, Loans And Financial Options in UAE