Basically, the term hard money meaning is used to describe the regular funding or a series of payments offered by the government. The best example of hard money is the government subsidies and scholarship offered to undergraduate students for free education.
Another definition of hard money is gold, silver, and platinum coins. The physical coins that are made of any valuable metal are known as hard money. The term differs from soft money, which is used to define the fiat currency. Soft money also refers to the payment transferred to the brokerage agency for research, financial advice, and other such services.
As mentioned before, hard money is used to highlight government funding that involves ongoing payments. For instance, the students getting a scholarship from the government get an opportunity to plan their future studies without having to worry about the funds. It gives them a budget certainty. This makes financial planning as well as budget a whole lot easier for students.
Hard money gets its name from the fact that this kind of payment arrangements does not take place frequently these days. Considering the current Economy, the government does not issue hard money, such as incentives and scholarships frequently. Fiat money, on the other hand, is the most sought-after currency.
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Hard money isn’t limited to the series of payments given by the government. The term is also used in politics. Hard money, in politics, can be defined as the amount contributed to the political leader or a party. Now, the contribution of money to the political community comes with certain limitations. This includes the restrictions on the total amount you can contribute to the political community and how can this money be used.
The contribution to the political party that does not include such limitations is known as soft money. For instance, each individual is allowed to donate a total of $2500 to the leader of a political party. However, there is no restriction as to how much money they can contribute to the political party or community. They can donate as much as they want to the political community. Here, the amount donated to the leader is hard money, while the contribution to the political party that doesn’t carry any restriction is the soft money.
Another meaning of hard money is the loan that is secured with property. When the borrower doesn’t have a good Credit Score, they turn to the private moneylender to obtain a loan by using their property as Collateral. This loan carries a high-interest rate since the moneylender has to bear a high level of risk. Hard Money Loan is used as the last resort. Borrowers who need a loan for the urgent financial requirements opt for a hard money loan. They are supposed to make the repayment within 1-3 years.