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7 Benefits of Working With a Direct Lender (Online)

Written by Jessica Steer
If you’re thinking about working with a direct lender for your next loan, the first place you should look is online. The rise of financial technology in Canada makes direct lending more accessible than ever.
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    The definition of a direct lender is slightly different depending on who you ask, but for purposes of this article, the term describes a lender other than a bank (usually a privately owned small-to-mid-sized company) that offers loans without the involvement of intermediaries.

    As opposed to going through a broker or investment bank, going directly to the lender means you cut out the middleman to save yourself money. When you work with a direct lender online, you are saving yourself money and time.

    With its flexible business model, an online direct lender can approve more applicants and offer rapid funding, usually within 24 hours. 

    There are seven main benefits of accessing financial products from a direct private lender online. 

    1. Take out the middleman

    Some brokerages and financial institutions are merely intermediaries that connect you with lending companies. These intermediaries usually charge an origination or application fee that the customer typically pays. However, when you go directly to the source, you are eliminating the need for an intermediary and the extra fees that go with it.

    2. Lower operating costs

    You should save even more when you work with a direct lender online. Since the high operating costs of a brick-and-mortar company often mean higher rates for the borrower, it makes sense that a digital-only business model reduces overhead and those savings get passed down to the customer. 

    3. Better chance of getting approved 

    While traditional lending institutions (such as banks) focus heavily on your credit report to determine your creditworthiness, your chances of getting approved diminish greatly if your credit score is low. Likewise, brokerages might want to help but are bound by the decisions of external lending partners. 

    But a direct lender operates under less rigid lending standards and has more flexibility to approve loans based on other information provided. For example, if you currently have a poor credit score but have a decent income, you have a better chance of getting approved for a loan with a direct lender. 

    Furthermore, some banks don’t offer small loan amounts. But with an online lender, you can get approved for as little as $500.

    4. Faster approvals

    While traditional banks can take days and even weeks to approve a loan, some emerging online lenders leverage advanced analytics and digital processes to quickly analyze your financial situation and assess your credit risk. 

    You can apply for a loan online at your convenience (usually 24/7) and it will be reviewed almost immediately. Once your application is submitted, everything—including the underwriting—is handled in-house, eliminating the time-consuming back-and-forth between lender and broker.

    5. Less paperwork

    Unfortunately, paperwork is one of life’s necessary evils. Though a direct lender can’t do away with documents entirely, the fact that there are fewer steps and stakeholders involved means you’ll be filling out fewer forms. 

    Many fintech companies make it easy for you to submit documents online by asking you to capture photos of the relevant documents with your smartphone. 

    6. Same-day funding

    By combining a simplified online application with a swift underwriting process and less paperwork, customers find that they get funded faster when they work with a direct lender.

    And since online direct lenders are used to working digitally, you’re more likely to receive your funds more quickly thanks to e-transfer technology. If speedy funding is important to you, look for a lender that provides this service to deliver funds to your bank account within 24 hours. 

    7. Flexible & tailored repayment periods

    Because of their size, most direct lenders can work with you one-on-one, allowing them to address your specific needs more closely. They are not bound by the terms set by external lending partners, giving them plenty of flexibility to help you build a loan that is tailored specifically to your needs. 

    Pro Tip: Look for lenders with open-ended loan clauses in the agreement. With an open-ended loan, you can pay back the entirety of the loan as early as you want to avoid interest charges.

    4 Tips To Find the Right Direct Lender

    Not all financial institutions are created equal. Here are a few rule-of-thumb guidelines to follow when you're looking for the right lender.

    1. Work with lenders that can improve—and not worsen—your credit

    In some cases, when a lender declines your loan request, it can affect your credit score and make it even harder to get approved the next time you apply. Choose a responsible lender that is set up to work with all credit situations. Furthermore, you should choose a lender that offers flexible payment schedules so that you never fall behind with your payment schedule.

    2. Look out for hidden costs

    As with any loan, you want to know exactly what you are spending and why. Always read the fine print before you sign on the dotted line. A reputable direct lender will be upfront and clear about costs, including maintenance and application fees. Be aware of any late payment penalties such as fees, increased interest rates, or repossession of collateral.

    3. Stick with reputed, trusted, and well-reviewed lenders

    Although there is a growing number of trusted lenders online, there is also a growing number of scam operators that prey on the most desperate borrowers.

    Look out for red flags of predatory lending, including offers like guaranteed approval and no credit check. Furthermore, feel more confident about who you work with by checking third-party customer reviews on sites like Google Reviews, TrustPilot, and Feefo

    4. Shop around for the best possible rates

    Always compare charges and rates. Understand what all financial institutions including banks, brokers, and direct lenders can offer. The more familiar you are with the landscape of lending, the easier it will be to find the best terms for your situation.

    What online direct lender offers personal loans?

    Spring Financial offers personal loans online! Apply today (in just two minutes) and start enjoying the benefits of direct financing from a trusted private lender.

    • Online personal loans: Get approved for loans up to $15,000 without even leaving your home.
    • Fast funding via e-transfer: Apply online in minutes and get funds sent directly to your bank account within 24 hours.
    • Trusted Canada-wide lender: Canadians love Spring. Check out our reviews on Trustpilot and Feefo.
    • No hidden costs: Never worry about hidden costs like application fees or maintenance charges again. 
    • Customizable repayment schedules: Payment plans are very flexible with terms of up to 60 months.

    Get approved with Spring Financial today!

    Online Loans from 9.99%*

    Skip the branch visits, apply online in minutes and get the financing you want today.

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