The money people borrow as loan to fund and pay for goods and services on their credit cards, use for car purchase, home or office renovations, to start up a business, pay for tertiary education and do all sort of things comes from the lenders. The lenders offering cash for loan can be divided into two entities; financial banks and direct private lenders. Financial banks are majorly the destination of many people when they think of getting and applying for loans due to the knowledge that banks hold people’s money and are always willing to borrow and make profits on interest, charges and fees to be paid under the terms and conditions of the each types of loan. For centuries before now, banks in Canada and any other countries of the world has been providing loans to individuals who merited them based on the requirements for the loan approval of each type of loan.
Presently, banks are not the only lenders offering loans to individuals and in Canada, people can get loans from direct lenders in same or similar ways that they are used to with the financial banks. Many individuals now get confused about where to go for loans between the banks they have been using for long and the direct lenders. In this article, you will learn about what direct lenders are, what they do and the kind of loan they mostly offer to borrowers.
Direct lending is a type and form of providing credit for corporate firms, small and medium scale businesses from lenders other than banks. In direct lending, the loan is approved and provided to the applicant and borrower without the intermediaries like investment banks, private equity or broker of any sort. The source of funds loaned out through direct lending can be an individual that is wealthy and wants to make some more cash from loans or an asset management firm. There is another type of direct lending which is called peer-peer lending which is a type of crowdfunding that provides cash for small businesses that need a small amount as loan.
In most cases, direct lenders do not check credit score or report of individuals before agreeing to borrow them cash. Most companies or corporate business with bad or poor credit score that cannot get loans from banks patronize direct lenders as a viable alternative while other people that are scared of the high interest rate that banks charge on loans also go to direct lenders for loans. Every one must deal with only reputable lenders and not the bad ones that may manipulate agreement made on loans.
Banks still offers loans to everyone that can meet up with the requirements for approval and as such people still patronize banks. Deciding on whether to access loan from a bank or direct lenders is a personal choice you have to make based on your chances of securing loans from the banks. Individuals with bad credit scores may seek direct lenders instead of payday loans from banks which are usually with very high interest rate.