One of the first rules of financial education that we should learn would be to know how to loan money with security .
There are different ways to lend money, knowing how to adapt to each of them will avoid having future problems or enmities. This guide will help you with all the tricks that you should know to know how to leave money with a guarantee and not suffer for it.
Lending money to friends or family
This is the first case that we are going to deal with when a relative or friend comes to us to ask us to loan them money.
Family and friends with the theme of money is very similar to water and oil repel each other. Many know that because of lending money to family and friends we have lost twice: money and friendship.
For this particular case there is no type of guarantee, only the friendship or closeness to these people makes our loan have a chance of return.
When we talk about collateral and especially in loans we mean that someone or something guarantees our investment. In this case it can be another person, a vehicle, a jewel, a property, something that has a value that equals or exceeds the amount we have borrowed.
Whenever we make this type of loan, it would be convenient to close it with a contract (if it is before a notary, better) if the amount is important, for small amounts € 100, € 500 does not compensate incurring expenses.
Another way to have collateral by which you can have a claim possibility is through a bill of exchange signed by the borrower. In the case of non-payment, the bill of exchange is a very powerful document for claiming money.
Lending money as a hobby or profession
Loans between individuals are in fashion, it is something that people like, they get on a platform of those that exist in the market and they feel like Gordon Gekko on Wall Street.
Lendico, Zank and Comunitae lendico, Zank and Comunitae existing P2P loan platforms offer a magic word “diversification” as collateral.
This word reflects that if you put 10 investments of € 50 and 2 do not pay you, they will compensate with the 8 good ones that you have left. This on paper and with the numbers on the table sounds good, but on the issue of loans and people "diversification" that they promise us will not always be as safe as they want us to believe.
Individuals who lend money on a P2P platform as the sole objective of diversification, run the risk of obtaining the odd default. I will not be the one who criticizes this type of loan, you just have to consult a lawyer to advise you on the pros and cons of a claim for a failed personal loan.
Banks have suffered this type of situation and sell their bad loan portfolios to vulture funds that have been in charge of claiming the debt for years.
Lending money with collateral (mortgage)
We have decided: we are going to lend money with interest . We will become that elite of lenders who make their investments a 12% annual return.
Among the entire list of existing websites and platforms, we are going to opt for the one that offers the best conditions with the greatest possible guarantee.
To lend money safely with legal guarantee, it is best for borrowers to provide real estate as collateral. It's the saying: if you don't pay me I'll keep your property. This today sounds a bit heavy but in reality if you lend € 30,000 to a person, do you risk losing your money completely?
Mortgage a property by lending money
When we loan money with a home equity, we make what is commonly called private equity loans . We become professional lenders, we will have to be registered with the Ministry of Consumption and have civil liability insurance that covers our liability.
This process is highly recommended when our loan activity exceeds 2 loans per year, since when our activity is legalized we can register all our loans before a notary.
When a borrower offers a property as collateral, it will be affected with a mortgage charge on said property until the loan is canceled. This mortgage guarantees by mutual agreement that if the amount loaned plus your interests is not answered, the judicial claim would go to the property that has been provided as collateral, therefore in case of non-payment the guarantee would go to the lender after a foreclosure.
Nowadays with the anti-eviction platforms, social exclusion and unemployment, everything that is foreclosure is a very hot topic, but it must always be borne in mind that when loans are made with legal mortgage guarantees, the responsibility of the person requesting the loan falls directly on him.
People who want to legally lend money only want the money to be returned with their agreed interest. They don't want property, as many of them already have property to spare. They just want to obtain higher returns than they currently receive on their deposits .
The image of the person who lends his money to another must be rejected as something obscure. It is simply doing a job that banks have always done: a bank makes money when it lends it thanks to the interest it collects on it.
Whether or not to provide guarantees to a loan operation between individuals is a matter that depends on each person in particular and the amount that you want to invest.
For small amounts with an investment portfolio of € 1,000, a P2P platform for loans between individuals can be a good training. When things get more serious and the amounts are already high, knowing how to lend money with a guarantee has its difficulty in analyzing the guarantees or guarantees provided.
Only with caution and analysis will we know how to lend money with guarantees and thus we will have our money safe from future problems.
It only remains for me to highlight the difference that can exist between a foreclosure and a monitoring claim for a personal loan that I will explain in more detail in another post.
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