Hard Money vs Private Lender

Differentiating between hard money and private lenders isn’t always as clear-cut as investors would like. In fact, hard money and private lenders have overlapping similarities. However, there are some major differences you need to be aware of.

In this article, we’ll highlight the similarities and differences between hard money and private lenders, giving you the ability to make an informed decision on which professional is right for your next purchase.

The Definitions of Hard Money and Private Lender

A hard money loan issues funds to purchase an asset, which could be real estate or equipment. The value of the asset will determine the loan amount and financing terms. On the contrary, a private money loan is funds issued by a private individual or organization. Private money loans can have more uses, from personal loans to vehicle loans.

Sometimes, hard money lenders are considered private lenders. This occurs if the hard money lender operates a private business that isn’t related to a big box store financial institution. Additionally, private lenders can also act as hard money lenders.

Similarities Between Hard Money vs Private Lenders

Hard money lenders and private lenders can share similarities. For one, private lenders and private hard money lenders aren’t subject to the same stringent regulations as financial institutions. This can add flexibility to the loan process, with the ability to adjust repayment terms and other factors based on your specific situation.

Furthermore, hard money lenders and private lenders can issue short-term loans. Hard money is more commonly used for short-term financing, but private lenders also have the opportunity to issue loans under 12 months. Repayment terms on short-term loans are similar, with interest rates higher than market averages to curb the risk assumed by the lender.

Moreover, both private lenders and hard money lenders will require some type of collateral to secure the loan. This is generally the item being purchased or a downpayment. Private lenders have more flexibility with the required collateral and downpayment.

Differences Between Hard Money vs Private Lenders

There are differences that you should be aware of. First, hard money lenders tend to gear their loans toward experienced real estate professionals. This is because hard money lenders are more organized than private lenders and are licensed to lend to investors in the real estate field. Fix and flip and other unique real estate loans are more readily available through hard money lenders.

Anyone can be considered a private lender, such as family members and friends. Hard money lenders are generally reserved for semi-institutional businesses made up of multiple investors and professionals. Furthermore, private money loans aren’t as structured, especially if the lender is inexperienced or related to you.


Are you leaning more toward a hard money lender or a private lender? Maybe you can enjoy the best of both worlds with the right private hard money lender. Reach out to our team at Wilshire Quinn Capital to go over how we can help you secure your next purchase.