Is this to be expected in the hard money world? - Posted by Johnny P

import · February 13, 2000, 12:22am

Posted by Ben on February 15, 2000 at 10:27:55:

See, I have a sense of humor!

import · February 13, 2000, 12:22am

Posted by Johnny P on February 13, 2000 at 01:22:48:

I found a deal where the owner is facing near foreclosure. Loan needs to be brought current and is in default $3,800.00.
I called an independent hard money lender and told him I needed $4,000.00. He will loan me this cash only with colateral. I will use my 1995 automobile to secure this (Short Term) loan.

My concern is if the interest rate being charged is fair:

I borrow $4,000.00 / Loan is a (1) one year Balloon/ Payments are interest only of $360.00 per month with the $4,000.00 due in 12 months.

Is this a fair rate of interest to pay on a short term loan? I never done one of these, but this guy claims he is actually letting me off easy because he figures I’ll need more loans in the future and he wants us to have a good relationship.

Please advise.

Thanks, Johnny P

import · February 13, 2000, 1:38am

Holy Cannolle! - Posted by Jim IL

Posted by Jim IL on February 13, 2000 at 02:38:50:

Johnny,
Why not goto a bank and get an auto loan?
OR
A finance company?
You may not even need to use the car as collateral.
or
Talk to your auto insurance agent. Mine has lenders at his disposal that will lend against cars, and do not charge high rates. I refied my car that way and got the payments lowered.

Just my thoughts,
Jim IL

import · February 13, 2000, 1:21am

Re: Is this to be expected in the hard money world? - Posted by Chris

Posted by Chris on February 13, 2000 at 02:21:26:

Johnny-

I think I errored with my prior post.

I reread your post. It looks like you may have gotten a vehicle title loan. Those usury limits go out the window-the limit for them in my area is somewhere around 280% APR(yes-two hundred eighty). The folks who usually do this to get some cash have a hard time digging themselves out of this hole.

-Good Luck, Chris

import · February 13, 2000, 1:13am

Re: Is this to be expected in the hard money world? - Posted by Chris

Posted by Chris on February 13, 2000 at 02:13:32:

Johnny-

Sounds fishy. The usury rate in my neck of the woods is 10 points and 18% interest per YEAR. A call to any mortgage broker will tell you the limits in your state.

If you cause problems with this “lender”, does he put you in concrete shoes for a swim in the river?

Ask him the rate for his customers who aren’t let off so easy.

-Chris

import · February 13, 2000, 1:08am

Re: Is this to be expected in the hard money world? - Posted by JD

Posted by JD on February 13, 2000 at 02:08:15:

That is not a typical rate, and probably not a legal rate, for a Real Estate loan. But you are not getting a Real Estate loan, you are in effect Pawning your car. That is a typical rate for a pawned vehicle.