Top 5 Myths about Private Equity Loans

Today from Your Best Loan we bring you 5 myths about private equity loans and we explain each of them.

The information that we find every day in the different communication platforms, especially in Internet forums about loans, the way to grant them, and their requirements can be, in the vast majority of cases, misleading. Today from Your Best Loan we bring you 5 myths about private equity loans and we explain each of them. Let’s see them. 

    1. “A loan is a negative debt” 

Some may think that asking for a loan will lead us to have one more debt in our financial life that will bring us headaches. This is very far from the reality since we have to take into account that a loan contracted responsibly serves to reunify debts, boost businesses, or obtain real estate, among others. 

Let’s face the loan as good debt, a debt that does is provide us with liquidity to make some type of investment that in the future will give us time and space to solve our financing needs, and this is always positive. 

     2. “They are going to drown you with interest” 

It is possible that in many entities you see that as the years go by, the interest percentage increases due to the use of variable interest rates and this is somewhat uncomfortable for our personal finance management because we feel we are in an endless alley.

In the case of the private equity loans that we handle in Tu Mejor Loan, this situation does not happen, because when our clients take out a loan with us they will have a fixed annual interest. This allows them to organize their short- and long-term payments with ease. 

     3. “The entities that offer them are not regulated”

Completely false. This activity is carried out under Law 5/2019 regulating real estate credit contracts. However, it should always be verified that the entities that offer loans adhere to this law. In the case of Your Best Loan, we have been registered in the Banco de España registry and we are strictly familiar with the Mortgage Credit Law. All this serves as a certificate that requesting a loan with us will give you all the existing guarantees, in addition to being a regulated, transparent and safe action . Always pay attention to this point when doing a search.

    4. “They are granted to everyone”

Nothing further from reality. Conventional and private equity lenders take into account different factors when granting a loan to a client. To begin with, it is very important to have your credit history in order and free of defaults; that is, have a good credit reputation. In turn, in the case of Your Best Loan, taking into account that we work with private equity loans with mortgage guarantee, the client who wants to request a loan will have to present a property as collateral or in the case of taxi driver loans a license of the cab. 

    5. “If the bank denies me a loan, so will a private equity entity”

A bank can grant a loan and a private equity entity deny it and vice versa. 

But generally, the reputation guides the entities and credit history of the applicant to analyze well their level of responsibility for payment. Thus, we could say that the client requesting the loan must have their financial skills organized, not appear in the delinquency files, and in the case of Your Best Loan, have available, if you are an individual and company, a mortgage guarantee such as a real estate or commercial premises inactivity, and in the case of being a taxi driver, your taxi license.