Professional lenders help offer funding to customers in the form of loans. This could be anything from mortgages to emergency loans. They make their money by charging interest which is paid along with each repayment. There are several different ways to become a professional lender. This post outlines 3 of them.
By Team Savant
Image: Daniel Thomas
Work For A Bank Or Loan Company
When working for a bank or loan company, you do not have to lend customers your own money. The company or bank provides the funding and you simply help control which customers have access to this funding.
Loan officers typically need to have a bachelor’s degree to get hired — preferably a finance-related degree. The role of the job involves checking potential customers’ financial history and then determining whether to approve them for a loan. Loan officers typically have to follow company rules when deciding who to lend to and can’t approve anyone.
The role of a mortgage loan officer may be a little more complex. On top of checking the financial history of potential customers, you may have to carry out valuations of properties and make sure that customers meet other criteria. This role typically does require having some sort of financial higher education qualifications and usually a mortgage license.
Become A Private Lender
Another option is to effectively create your own loan company. This involves loaning out your own money to customers.
As a private lender, you have more control as to who you lend to and what terms you want to offer. You are, however, risking your own money - if you loan money to a customer and they don’t pay you back, you’ll have lost money. Fortunately, when creating an official company, you’re likely to be financially compensated by the FSCS when this happens, but you’ll need to make sure that your company is registered.
To start a loan company, you generally need to have a lot of money to start lending it out regularly. Many people who start such companies already have successful businesses making large returns, or have weath that they’ve inherited. You’ll likely want to invest in loan management software and you may also want to hire employees if you’re going to be receiving lots of applications.
Of course, you don’t have to create a company and loan out money regularly. This could just lend to one or two people as a personal investment. This leads onto the next form of lending.
Try Peer-To-Peer Lending
Peer-to-peer lending is a pretty new form of lending that almost anyone can partake in. Using an online platform, you can connect to customers who are looking to borrow money. You decide how much money you’re willing to lend out and then get to choose potential borrowers who are looking to borrow this amount and whose cause you support. This could be thousands of dollars or as little as $100.
Peer-to-peer lending can be a great investment strategy as you get to make money back on instalments via interest. However, it is worth noting that it can be risky — the money you lend is not covered by FSCS and so if a customer defaults on a loan, you will not get your money back.