Let’s face it, life is expensive. Owning a home, buying and maintaining a car, and buying groceries, the costs can add up. While some people have enough or make enough to afford all the costs that come with our daily lives, this isn’t always the case.
If you’re looking for more information about borrowing to cover the cost of an unexpected expense or are simply looking for information about private lenders in Canada, we have you covered.
What Is a Private Lender?
As you could imagine, a private loan is a loan from a private lender. But what makes a lender “private”? Essentially, a private lender is any lender who is not associated or affiliated with a traditional financial institution. Normally, these private lenders are not as constrained by regulations and thus can offer terms and approve applications that many standard lenders would not be able to do.
A private lender can be a company, a group, or even simply an individual. The private loans that they offer work very similarly to the loans offered by a bank or other traditional financial institutions.
However, because they expose themselves to more risk than traditional lenders, many private lenders will charge slightly higher interest rates to protect themselves. Of course, the actual rate and the terms of each lender will vary.
Compare private loans, personal loans, and payday loans, click here.
Finding a Private Lender That Offers Personal Loans in Canada
Depending on where you live, there is a very good chance that there are multiple private lenders in your area that would be willing to work with you. So how do you go about finding one to work with?
First of all, you should have a good idea of the type of loan you’re interested in. Different lenders will have different specialties and will work better for certain situations. Know the kind of loan you want, how soon you need it, and how large it should be. Once you know what your needs are, next you need to look closer at the available options.
This is the research phase of the process. Look for an online presence for any private lender you might want to work with. Do they have any online reviews? Are the reviews good or bad? Does it seem like they have a good reputation? Are they advertising their rates, terms, conditions, fees, etc.?
During this research phase, you should be able to weed out the good from the bad in your area. The lender you ultimately go with should have a good reputation, offer what you need, have impressive experience, and be somebody you are comfortable working with.
While most lenders are legitimate and simply want to provide a service, there are some predatory lenders out there. Some signs of a predatory lender include:
If you feel uneasy about a lender for any number of reasons, it is best to trust your gut and move on to another one.
The Benefit of Working With a Private Lender
Now that you know how to find the right lender, what are the benefits of working with a private lender over a traditional financial institution? One of the first and most important benefits simply comes down to convenience. Private loans are often easy to apply for and come with quick approval times. You will no longer need to wait many days or potentially even weeks to hear back from a lender and get your money.
Another great benefit of working alongside a private lender is that they can offer personalized service. They will work directly with you to find a good solution for your needs and are generally more flexible and willing to make changes if need be.
The terms of these loans are also more relaxed, which is great for reducing stress. Many will offer flexible repayment plans that most traditional lenders simply cannot offer their clients. Of course, these loans aren’t perfect, so be sure to read the fine print and be aware of everything you’re agreeing to before signing anything.
What Types of Loans do Private Lenders Offer?
The good news is that private lenders offer many of the same loans you expect from banks. A number of the most common and popular loans out there are offered by most private lenders across the country. This includes:
As mentioned previously, each individual lender will decide what loans to offer, and what rates or terms will accompany those loans. If you have unique borrowing needs, don’t be afraid to ask a lender if they will be willing to help you out. They will generally be more willing to do so than traditional lenders.
Also, different lenders are able to decide who they work with and who they don’t. So while some may be comfortable working with individuals that have lower credit, this isn’t always the case and you shouldn’t expect them all to be the same in that regard.
When is it the Right Time to Choose a Private Loan?
As a Canadian consumer, there are countless borrowing options to choose from so it can be difficult to decide when to go with a private lender. But the good news is that private lenders offer unique opportunities for borrowers to gain access to the funds they need. Here are a few situations where a private lender could be the right choice for you.
If You Have Bad Credit
For those consumers that have less than favourable credit, a private lender is often more willing to work out a deal that takes into consideration more than your credit score.
As an Alternate Option
First, it may be your only option. If traditional banks and institutions won’t offer you the loan you require, the next logical step for you is to go to a private lender. They might not offer you one based on your request, based on your credit, or your overall financial situation. Many private lenders are willing to work with a larger variety of people than banks or credit unions.
Check out this article to learn more about what lenders look for with bad credit borrowers.
You’re Looking For Quick Approval
Another great situation to make use of a private lender is when you need money quickly. Many traditional lenders take longer to approve applicants and get them the money they need. If you want quick approval, private lenders are certainly a good option.
If They Offer The Features You Need
Also, you might simply find, during your research, that the benefits and features offered by private lenders match up with your needs better than traditional lenders.
Frequently Asked Questions
Can I get a personal loan from a private lender if I have bad credit?
There are many private lenders that are willing to extend a loan to borrowers with bad credit. They will often look at other factors to determine your eligibility such as your income, employment stability, debt-to-income ratio and more.
What requirements do I need to apply for a personal loan with a private lender?
The requirements required are dependent on the lender you choose to apply with. However, in general, most lenders will require you:
To be 18+ years old or the age of majority in your province
To have a reliable source of income
To have a reasonable debt-to-income ratio
Can I get an unsecured personal loan with a private lender in Canada?
Yes, depending on the lender you choose you can get an unsecured bad credit personal loan with a private lender in Canada. However, you should be aware that an unsecured bad credit personal loan will usually come with high-interest rates. Consider adding an asset as collateral to take advantage of better terms and lower rates.
Looking For an Alternative Lender?
Loans Canada works with a wide variety of lenders and service providers to help you find the best fit for your needs. We are confident we can help you by matching you with a great lender in your area.
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