Being a pro athlete can be exciting. From pecks that come with it to the fame that you get, being an athlete is one of the most exciting careers. Even more, athletes tend to earn handsomely. However, this doesn’t shield them from common financial issues. Athletes, like other people, requires money to finance different projects and needs. That’s why getting a loan is extremely important. The best part; athletes can use their contracts to secure loans. Here is how you can use your pro athlete contract to secure the best loan.
Why Athletes Need Secured Loans
Even with their multi-million dollar contracts, professional athletes might still need loans. Remember, most athletes are drafted immediately after college. And on average, most of them retire at the age of 33 or 28 in the NFL. Handling exorbitant amounts of money at such a tender age, athletes usually find that the desire to spend their money outweighs their need to save and invest. This, in turn, leaves them in need of financial help in between paychecks. And this is where collateral loans come in handy.
Sports lending isn’t something new. There are quite a handful of companies that are currently offering flexible loans to athletes. Nonetheless, those lenders usually charge higher interest rates and require you to be locked up into a 2-year or more payment plan. So, be sure to shop around for a lender that offers better rates to avoid breaking your bank.
Most banks consider professional athletes to be high risk. They’re particularly concerned by the fact that their employment isn’t stable because a contract can be canceled any time or not renewed for the coming season.
If you get seriously ill or injured, you might not be able to work for a long time. As such, most lenders have stricter policy guidelines when lending money to professional athletes.
To qualify for a loan, you should have been running professionally for at least 2 years and should also provide proof of any income from endorsements. The reason why lenders require you to have two years of experience is that your income might fluctuate from season to season. They do this to make sure that your income is consistent in the long-term. So, if you’ve been playing professionally for a shorter period, you might not qualify for a loan on your athletic sports contract.
Most contract loans will finance up to 30 percent of a guaranteed contract. And for non-guaranteed contracts, the lender will finance 10 percent of your contract.
Other benefits that come with sports contract loans include competitive interest rates, customized repayment terms, and funding within 48 hours. Plus, no collateral is required. You can use the money to invest in real estate, commercial ventures, as well as other projects.
Athletes have unique borrowing needs that don’t often meet the credit policy guidelines offered by most lending institutions. However, there are a couple of companies that focus on helping athletes secure by using their sports contracts as collateral. Thus, it’s advisable to do your research before taking loans for pro athletes.
Of course, being an athlete is highly rewarding. However, human needs keep on increasing. There is nothing like enough money. People live on loans. You too, as an athlete, you can get a loan against your contract and solve all your financial needs. The above guide will help you secure the best loan from your pro athlete contract.