Direct Lender

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Direct Lender

Loan Agency

Life is full of ups and downs, as can be true with our financial situation. While we can try and budget and prepare for all of life’s expenses, there are often unplanned situations or emergency costs that throw this planning out the window.

For many Canadians, seeking out a quick cash instalment such as a payday loan can be an incredible financial resource. While payday loans are often accessible and fast, understanding who you are borrowing money from is vital. It's always a good idea to check a lender's reviews before making your decision.

To keep you informed and empowered, here are some top tips on understanding payday loans in Canada and direct lenders:

Direct Lending 101

If you are looking for quick cash up to $1500, a direct payday loan provides what can be considered an advance on your regular paycheck. While it is not actually linked to your employment, it is a short-term, unsecured loan that uses your employment and income as approval information. There is no collateral needed, meaning it can be a fast and effective way to speed up your pay cycle.

These days payday loans can be applied for swiftly and funds transferred in minutes! They are generally easier to qualify for than a traditional bank loan, as they are not solely based on credit.

What Is A Direct Lender?

A direct lender is a non-bank creditor that a borrower applies to directly. And unlike a loan matching service, there is no middleman. A direct lender is what you likely know as a loan agency, and can be either online or in-person.

While a quick search may make it seem easy, the choice of loan agencies can be overwhelming. It’s important to take the time to research direct lenders thoroughly and read through and contractual agreements before signing.

As you will be borrowing funds directly, each lender will have their own specific terms and conditions. But rest assured, while this is different from a bank loan, lenders must be licensed in Canada, and therefore borrowing from a reputable agency will still be a safe financial move.

How Is A Direct Lender Different From A Bank Loan?

While you may automatically think of a bank when you think of a loan, applying for a loan from a direct lender is different in many ways:

  • The approval process on a loan from a direct lender can be very fast, and sometimes even instant. With a bank or a loan connection service, there are often many more time-consuming steps involved, increasing the time it takes to get the funds in your account.
  • Compared to other loan options, the application process with a direct lender is usually very easy. The information required is likely to be straightforward and easy to obtain, making it a smoother process overall. This is crucial when you need money now.
  • Unlike a bank where you likely need an appointment with a banker, you can usually seek a loan from a direct lender at a time that suits you. Many private lenders have their services available 24/7 online.
  • And because a direct lender is usually accessible online or by an app, you can skip that trip to the bank!

What Are The Requirements For A Direct Loan?

Every lender has specific minimum criteria that must be met - if they aren't met, then the applicant won't be approved for a loan. Direct lenders reserve the right to reject applicants that they deem too high a risk to qualify. This is true of every licensed, reputable lender in Canada. Whether it's in Saskatoon or Nanaimo.

  • When applying for a loan from a direct lender, you are much more likely to be approved than when applying for a traditional bank loan. However, factors such as the amount borrowed, interest rate, and repayment terms may be different to a bank, as with the eligibility requirements for individuals
  • You may be worried about your credit, but your credit score plays less of a role in approval than you may realize. Factors such as employment status, income and lending history will be assessed, too, and no decision will be made on credit alone. Lenders know that stability is more important, and even if you have bad credit you can still be a great loan candidate

Applying for loan from a direct lender looks like:

  1. You fill out a loan application form either via a web page or a mobile loan app. Information such as contact details, income information, the requested amount to be borrowed and the length of the loan will all be gathered.
  2. An advanced algorithm reviews your application, and a decision will likely be provided instantly
  3. If approved, your loan agreement will be sent to you digitally. It can be reviewed, signed, and sent back in a few easy clicks
  4. You will then receive your funds in your preferred way within a few minutes. New transfer processes mean that you no longer have long online banking delays, as you may be expecting with traditional loans
  5. Principal and interest payments will automatically come out of your account on the date agreed upon in the loan agreement. Your bank information will be gathered during the application process, and a clear repayment schedule will be provided to you so you can be prepared

What If I Have Bad Credit?

If you have a low credit score, no credit score, or have been denied a loan in the past, you may believe that you are not eligible to apply for funds from a bank or a direct lender. While traditional bank loans are harder to come by, there are many direct lenders these days that specialize in bad credit lending.

Many direct lenders don’t even require a minimum credit score! Depending on many variables, you may still be approved for an amount up to $1,500. Even if you don’t have the required credit, be prepared to provide your credit details as a form of identification, and to help validate your income and employment details.

At My Canada Payday, we believe that your loan eligibility comes down to more than your credit score. For this reason, our scoring system relies primarily on your online banking details to show that you have the capacity to repay the loan, and less emphasis on how your credit activity has been historically.

Direct Lender FAQs

All you ever wanted to know about direct lenders

How does a direct lender differ from a broker?
Direct lenders are using their own funds to finance your loan, and your contract is with them. A broker, on the other hand, is in the business of arranging contracts between two other parties. They make an introduction, but you don't owe them money directly. Typically a broker will take a fee from either the borrower or the lender.