JL Llavina Highlights 5 Critical Things You Need to Know Before Getting a Loan
Navigating the lending landscape is a complex undertaking, so it is imperative that individuals perform the necessary research before making a significant financial decision. To help individuals find their bearings and further understand the lending process, JL Llavina, from Sandy, Utah — whose firm specializes in providing private lending, commercial developments, and land acquisitions, takes the time to outline the following primary factors.
1. There Are Various Types of Loans
There are various types of loans available depending on an individual’s financial situation, including long- and short-term loans, lines of credit, and alternative financing.
Additionally, there are loans that are not typically offered by banks or credit unions, such as private lending (also referred to as hard money loans). Jose Luis Llavina claims that private lending may be suitable for borrowers who need quick access to cash and want or need to negotiate flexible repayment and collateral release terms.
2. Focus On Your Ability to Repay the Full Amount
It is just as vital for borrowers to clearly evaluate their ability to repay, in order to ensure that they can service their loan throughout the term without defaulting and losing their collateral. Adds JL Llavina: “Borrowers need to look beyond the APR and use amortization calculators and other tools to determine the total amount repayable. “
3. Understand the Role Your Credit Score Plays in the Process
Ever since the Great Recession that erupted in 2007/2008, banks have dramatically tightened up their lending requirements. However, if you are shut out of the conventional loan marketplace — or if the strict terms and conditions are not suitable for you — then you can explore the alternative lending marketplace, which has grown substantially. Jose Luis Llavina states that hard money loans can be a viable option for borrowers with damaged credit scores or a past bankruptcy, since the loans are backed by collateral.
4. Understand the early prepayment penalties
Some lenders impose prepayment penalties, which compensate them for the interest payments they expected to receive as part of the deal. Private lenders are much more flexible than banks when it comes to making it easier for borrowers to pay their loan back early.”
5. Understand the timeline
Last but certainly not least, if you have your eye on a golden opportunity — such as a dream house that is suddenly on the market at a great price, or a parcel of land that would be perfect for your business — then beware that bank loans can take months to snake their way through the process (and dozens of administrators).
If you are looking at a Small Business Administration (SBA) loan, expect for the process to take half a year or longer. On the other end of the spectrum, the private lending process typically takes a matter of days; and in some cases, hours. Adds JL Llavina: “Private lending enables homeowners and investors to close on a property very quickly, instead of lose the opportunity to someone else.”
The Bottom Line
Getting a loan is a significant financial decision, and one that you simply cannot afford to take lightly. Keeping the above advice in mind will help ensure that your borrowing experience is profitable and rewarding, instead of costly and regrettable.